This archive report was first published on 14 July 2021.
July 14, 2021, marked a significant milestone in Kenya's real estate market with the introduction of Real Estate Investment Trusts (REITs). These innovative investment instruments have been gaining popularity, backed by income-generating properties such as apartments, offices, and hotels.
Today, the Nairobi Securities Exchange boasts three REITs: Ilam Fahari I-Reit, Acorn Development Reit, and Acorn Income Reit. Industry players are working to introduce new products, including Islamic REITs and Social REITs, to cater to diverse investor needs.
Einstein Kihanda, CEO of ICEA LION Asset Management, highlighted the success of Ilam Fahari I-Reit, which has attracted over 5,500 retail investors and a few institutional investors. To further grow the investor base, the company is engaging with government and market regulators, partnering with other REIT providers, and educating the public on the benefits of REITs.
According to the REITs Association of Kenya, REITs offer numerous benefits to investors, including exemption from income tax, lower capital requirements, exposure to expertly managed properties, and a regular income stream.
The Kenyan government is also taking steps to attract investors to REITs. In June this year, Cabinet Secretary Amb. Ukur Yatani announced the reversal of Value Added Tax (VAT) on asset transfers into REITs, citing the need for innovative financing alternatives to promote affordable housing and specialized facilities like student hostels.
