The Relationship Between Real Estate Investment Trusts and Financial Performance of Investments in Real Estate Sub-sector in Nairobi County, Kenya

Abstract

Although the demand for social housing is growing and investors' investment opportunities in real estate are increasing, property prices are still increasing. This study is to apply the design of the descriptive study. Research conducted from REIT listed on Nairobi Stock Exchange. Research subject is Stanlib Fahari IREIT. The census survey was adopted since the population is small. Therefore, the survey sample was 10 managers. Primary data was collected using a structured questionnaire and secondary data was collected using a literature review form. Both primary and secondary data were analyzed using Excel's Social Science Statistics Package (SPSS) and Stata. Clear insights and result examine were performed dependent on the gathered quantitative information and the outcomes introduced in the Results area. Distinct measurements comprise of rate, recurrence, mean, and standard deviation. Connection and relapse techniques were utilized to decide the connection between REIT land ventures and monetary execution. There are various factors that influence investment ratio in real estate within Nairobi County. The management in Stanlib Fahari I-REIT face various constraints to increasing investment in real estates in Kenya. This research also concludes that REITS are not popular in Kenya due to various reasons with lack of knowledge and adverse selection being the major reasons. From the descriptive statistics, the study concludes that the demand and supply of housing; disposable income of Kenyans; and prevailing economic conditions influence the performance of real estate investments in Nairobi County. The study also concludes that the Kenyan government give tax credits and subsidies to REITS without any restrictions. Among the REITS in Nairobi County, default risk premium is attached to the interest charged. The study also concludes that REITS in Nairobi County are attractive to potential investors. From the descriptive statistics the researcher concludes that real estate investments in Nairobi County are experiencing increased return on investments and dividend yields but progressively low equity turnover. The capitalization of real estate investments in Nairobi County is relatively high compared to other firms. Correlation analysis shows that REITs have a significant positive impact on the financial performance of real estate investments. This suggests that REITs have a positive and significant impact on the financial performance of real estate investments in Nairobi County. The study concluded that real estate investment trusts affect the financial performance of real estate investments in Nairobi. Regression analysis showed that the increase in commercial lending as an indicator of REITs significantly improved the financial performance of real estate investments. This suggests that REITs have a positive impact on the financial performance of real estate investments in Nairobi County. To improve the financial performance of real estate investments, this study recommends that REIT managers increase their funding through their activities. The government is working with REITS managers to develop public awareness programs. This study recommends that you do the same for other factors that affect the financial performance of your real estate investment. Similar surveys are also recommended to compare results using unlisted REIT respondents. The study also recommends a study of how REITs affect performance indicators of other real estate companies, such as sales.