Challenges and Prospects of Real Estate Investment Trusts (Reits) Financing of Real Estate in Kenya
Abstract
A REIT (real estate investment trust) is a real estate firm which acquires,
constructs or manages different types of buildings that are put up in various
locations. REITs are a form of financing instruments from firms that source
funds to build or acquire real estate assets which they sell or rent to generate
income for the investors whom invested their funds in the firm. The income
that is generated by the firm over the period is then distributed to the
shareholders at the end of the financial year. The main aim of this study is to
investigate the various challenges and prospects that such an investment can
attain within the real estate sector in the country. This is a new
venture/investment that has been introduced in the Kenyan market and this
study will be able to identify the various challenges that affect the REITs and
prospects that such an investment holds once it picks up in the country.
Based on the type of research to be carried out the best research design that
would be appropriate for this research is an exploratory study research design
approach due to the fact that this is a very new investment that has been
introduced into the Kenyan market. The population of the study was 156
developing firms within Nairobi and a sample of 70 was selected for a
representative of the population. Both primary data through the use of
questionnaires and secondary data was used in the study.
The challenges that have been identified are policy, regulations and
procedures, high dividend pay-out, culture of capital structure within the
organization and market awareness of the investment vehicle. The prospects
that have also been identified by this study were increased commercial and
residential properties as a result to increased supply of real estate properties
within the country, new pool of investors in real estate, huge source of capital
for various real estate projects that require high source of income funding and
high liquidity in the real estate sector. Interest rates, inflation rate and market
capitalization were analyzed and concluded that these factors have a
significant effect of on the REITs financing of real estate in Kenya. Further
studies should be done on the various factors that affect the REITs financing of
real estate in Kenya.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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