Effect of Foreign Direct Investment on the Growth of Real Estate Firms in Kenya

Abstract

A business success or failure in the 21st century depends on how well it can compete in the existing market. The global system has harmonized standards from country to country right across to the lowest common denominator. The real estate property market has had tremendous growth because of the belief among investors that real estate is an asset that can offer security in terms of income and capital flow or both. In Kenya the real estate sector has expanded so much that it has turn out to be the fourth biggest contributor to the economy’s wealth. This current study pursued to fill in the current research gap in this sector by answering the following research question; what is the effect of foreign direct investment on the growth of real estate in Kenya. This study adopted a descriptive research design. For this study, the target population consisted of the 80 real estate companies in Kenya. The study purposively selected one finance manager from each of the 80 Real estate companies in Kenya. Both primary and secondary data sources were used for the study to gather data for analysis. Primary data collection involved self-administration of a questionnaire. Quantitative data was analysed using descriptive analysis like frequency, mean, percentages and standard deviation, using SPSS as a tool for the analysis. Content analysis was used in analysing qualitative data. Here the opinion of the respondent was presented in a prose form. The study used multiple regression analysis. The study established that foreign direct investment influence growth of real estate’s sector in the country to a great extent. It also established that the Kenyan government has initiatives of attracting foreign direct investments in the real estate’s industry in Kenya. From the regression analysis, the study found that foreign direct investment positively influences growth of the real estate’s sector in the country. The study also recommends that the government should enhance implementation of the various policies that will attract foreign direct investment in Kenya will be of benefit on the real estate progress in the Kenyan industry to a great extent. The government should have incentives that will attract FDI to the real estate sector stimulating the growth of real estate’s sector in Kenya to a great extent.