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Real Estate Investment Trusts 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 /FILE


Experts say REITS can unlock the potential of Kenya’s real estate

NAIROBI, Kenya, Jul 14 – Real Investment Trusts (REITS) have the potential of unlocking the value of the real estate sector in Kenya by helping developers have access to capital.

This is according to Capital Markets Authority Chief Executive, Wyckliffe Shamiah who says Real Estate Investment Trusts (REITS) give investors an opportunity to diversify their investment portfolios.

Real Estate Investment Trusts 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.

REITs provide Kenyan investors with an opportunity to invest in the Real Estate sector without requiring large sums of money and addresses the challenges facing Real Estate owners and developers.

They also mitigate the substantial risks faced by investors when investing directly in real estate by giving them access to professionally managed, regulated investment vehicles.

Shamiah has encouraged real estate developers and investors to consider such investment trusts, saying they are a regulated product that is safe 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 address finance constraints that restrict the access to this asset class and offer investors with a matched opportunity to access real estate developments.

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In 2013, Kenya became the third African country to establish REITs as an investment vehicle with the Kenyan REIT regulations providing for 3 types of REITs, namely; I-REITs, D-REITs and Islamic REITs.

The NSE currently has three REITs i.e., 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 investor. REITs give the retail investor the ability to participate in the ownership of larger developments that would otherwise be out of their reach. All this, while offering solutions to the traditional challenges involved with property investment especially illiquidity, transparency and price discovery” 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. The success of this asset class is hinged upon continuous engagement among all stakeholders including regulators, developers, media and the exchange with a view to demystifying the risks, rewards and opportunities for potential investors.”

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