The introduction of Real Estate Investment Trust (REITS) in Kenya has potential to transform the capital markets and the overall economic growth. REITS are a form of asset securitization that has the ability to towards transform real assets, commodities, products, or receivables into liquid securities tradable in financial markets. Among other benefits, asset securitization enables real estate assets to be tradable in the capital markets and hence more liquid. County governments have been entrusted with constitutional responsibility over urban development and construction of houses.They must adopt cogent strategies to integrate their vision into the REITS regime. REITS would infuse additional capital which could reduce the supply gap of real estate assets including residential and commercial structures. This may quell the now common phenomenon of rent inflation in Kenya’s urban centres, and the concentration of commercial properties in the hands of institutional investors like banks, insurance companies, corporate organizations and pension funds. Secondly, a successful REIT market would open up real estate investing to a whole new pool of investors, which would ensure a more equitable ownership structure for real estate assets especially on the commercial properties. Thirdly, REITS would expand the range of alternative investment choices and opportunities both for retail and institutional investors. With increasing numbers of investors and innovative products, the efficiency of the financial markets would improve and real estate assets would be more liquid leading to well co-ordinated developments.
Posted on: Sun, 01 Sep 2013 10:06:44 +0000
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