Expert calls for sensitization on REITS


By Ronald Owili

KBC Radio_KICD Timetable

More investor education on the real estate investment trust is needed if Kenyans are to embrace the capital raising model for financing construction of housing units to bridge a supply deficit.

MMC Africa Head of commercial property department Ester Omulele says in the midst of a slowdown in loans from the financial sector, pooling of investments under REITs is among ways to reduce the cost of housing on a longterm basis.

Also Read  Covid-19 brings out resilience of Kenya’s flower industry

In Kenya, the housing deficit is pegged at 250,000 units annually as rapid urbanization creates demand, with political class seemingly imprecise about a long term solution.

Get breaking news on your Mobile as-it-happens. SMS ‘NEWS’ to 20153

Nonetheless, the housing sector continues to attract billions of shillings in local and foreign investments driven by high returns averaging 25 percent compared to a mean of 14 percent in other asset classes over a 5yr period.

Also Read  Stanbic Holdings full year net earnings down 19% on covid

In the wake of slow credit from banks, Omulele says Kenya’s best bet in meeting the housing shortage is in the Real Estate Investment Trusts introduced four years ago.

Only Stanlib has so far managed to float an income REIT which sought to raise 12.3bn from investors in 2015 but managed 3.5bn.

Also Read  Kenya expanding aviation, shipping and railway capacity

While low awareness plague the investment vehicle, Omulele advises promoters to diversify products to entice investors.

Caution on income REITS is also critical if you decide to invest. MMC plans to float a KES 3bn development REIT in the first quarter of next year.

 

 

KBC-You-tube-728x90-New-2

Tell Us What You Think


SHARE