An Assessment of the factors affecting the growth in real estate investment in Kenya.

Abstract

Real Estate investment represents a significant portion of people's wealth and this is especially true for many real estate investors in Kenya. Real Estate investment plays crucial role in providing employment opportunities, offering shelter to households, enhancing income distribution and alleviating poverty. However, the investment in Kenya continues to fail to fulfill this fundamental role due to a number of unique factors that affect the sector. The study investigated factors such as GDP Growth, the influence of interest rate, inflation rates and population growth. The study adopted both quantitative and descriptive research design to obtain information especially true for many real estate investors in Kenya. The study therefore, investigated the contribution on the current status of the phenomenon. The population in this study was real estate investors while the target population included private and public property investors. Data for analysis was based on the real estate and renting businesses as sourced from the various Economic Surveys and Kenya Statistical Abstracts Issues. The data obtained was analyzed by use of the Statistical Package for Social Sciences (SPSS) to obtain descriptive statistics and a regression model. From the results the contribution of the factors affecting real estate growth as measured by Pearson correlation coefficients indicated that GDP took the highest share with a value of 83% followed by inflation growth at 78% while interest rate came third with value of 75%. Population growth contributed the least to the growth in real estate investment with a value of 29 %. Therefore the study hypothesis that GDP is the most significant contributor to the growth in real estate was supported by the data. In addition GDP growth, interest rate variation and growth in inflation were found to be statistically significant determinant of real estate growth. A summary of the regression results showed that the variables considered could explain up to about 70% of variations in the investment growth. The study recommended that Policy measures geared toward improving the economic growth and curbing rising inflation rates and interest rates should be undertaken as they increase the investment levels. Finally the study recommended future research on the impact of population growth on real estate investment.