AN ASSESSMENT OF THE OPPORTUNITIES AND CHALLENGES FACING FUTURE INTRODUCTION OF REAL ESTATE INVESTMENT TRUSTS (REITS) IN KENYA

ABSTRACT
With the current absence of REIT styled vehicle in Kenya currently the project
examine the opportunities and challenges the country is likely to encounter after the
introduction of REITs. Currently the CMA has formulated the Real Estate Investment Trust
Bill of 2012 and it’s waiting the parliament approval and enactment to become operational.
The objectives of the study were to look at both historic experience and emerging trends for US and Australia on REITs and to identify their level of similarity and variance. To analyze
Kenya’s market fundamentals and regulatory environment of REITs, to identify the
opportunities and challenges associated with the future adoption of REITs in Kenya. Lastly
to draw experience from Singapore and South Africa REITs, to reveal the practical issues
they have encountered.
The study provides a historic, theoretical and comparative study analysis of the
United States of America and that of the Australia to identify their level of similarity and
variance. The study then looks at the history of Kenya real estate sector from year 2000 t
2012 and summarizes the proposed REITs regulations for Kenya. Finally the study draws 
closer look at the REITs structure of Singapore and South Africa to identify the practical
and operational experiences as a lesson for Kenya.
The study found that, although the Kenya REIT framework has introduced a new
type of REIT known as D-REIT that has not been practiced anywhere in the world, it has
maintained the core features that are necessary for success of REIT around the studied
countries. On capital side the study has found that the Kenyan real estate is heavily
dependent on bank loan and there is need for a diversified means of raising construction
capital.
The study concludes that both I-REIT and D-REIT proposed on the REIT
regulations be introduced in the market because they bring more opportunities than
challenges and diversify the construction risk.
The study recommends for enactment of REIT bill in to law and on the key issues
raised by the objectives as well as the REITs implementation plan.

 

Documentation :