This archive report was first published on 14 July 2021.
On July 14, 2021, the Chief Executive of the Capital Markets Authority, Wyckliffe Shamiah, highlighted the potential of Real Estate Investment Trusts (REITS) in unlocking the value of Kenya's real estate sector.
According to Shamiah, REITS give investors an opportunity to diversify their investment portfolios and provide developers with access to capital, which is essential for the growth of the real estate sector.
REITs are regulated Collective Investment Schemes where their managers source funds to build or acquire real estate assets, which they sell or rent to generate income. The income is then distributed to the investors.
The property is held by a trustee on behalf of a unit holder and professionally managed by a REIT manager.
Shamiah encouraged real estate developers and investors to consider such investment trusts, saying they are a regulated product that is safe and offers protection to investors.
"We therefore encourage issuers (real estate developers) and investors to consider REITS which is a regulated product with safeguards to protect investors," Shamiah said.
Commenting on the same, NSE CEO Geoffrey Odundo noted that REITS enable property owners and developers to address finance constraints that restrict access to this asset class and offer investors a matched opportunity to access real estate developments.
Kenya became the third African country to establish REITs as an investment vehicle in 2013, with the Kenyan REIT regulations providing for three types of REITs: I-REITs, D-REITs, and Islamic REITs.
The NSE currently has three REITs: the ILAM Fahari I-REIT, which started trading in November 2015, and the Acorn Student Accommodation I-REIT and D-REIT, launched in February 2021.
"Property in Kenya has always been an emotive subject. REITs have opened up a new investment asset class that is accessible not only to large investors, but also retail investors," observed Kenneth Masika, RAK Chairman.
Speaking on lessons learnt from fund raising, feedback, and the future of REITs, Raghav Gandhi, CIO Acorn Holdings Limited, noted, "Globally, REITs are the ideal vehicle for investments by institutional investors in real estate and so, they present the perfect opportunity in Kenya towards institutionalizing investments in real estate."
