NSE launches much-awaited Real Estate Investment Trust

The launch of a Real Estate Investment Trust (REITs) market by the Nairobi Securities Exchange (NSE) opens a widow for Kenyan investors to cash in on the country’s lucrative real estate market.

The launch of the investment vehicle yesterday adds another feather in the cap of East Africa’s largest bourse, making it the third exchange in the continent to host a REIT market. According to Mr Geoffrey Odundo, the bourse CEO, launch of the new investment vehicle is targeted at investors who do not have the financial muscle to put up large developments but still desire to actively take part in the country’s growing real estate sector. “The launch of REITs further enhances financial inclusion in our capital markets as average investors will now be able to invest in large-scale commercial, residential and industrial properties, without requiring large sums of money,” he said.

Under the real estate investment trusts, investors are allowed to collectively pool their resources into one investment vehicle, which is then invested in a portfolio of selected properties. This allows them to gain through capital appreciation and rental income, with the latter’s earnings being distributed to unit-holders annually.

The launch of the NSE’s REIT market coincided with opening of the STANLIB Fahari I-REIT public offer. Investors looking to buy into the STANLIB Fahari I-REIT public offer have three weeks to place their bids. STANLIB Fahari I-REIT is offered at a minimum subscription of Sh20,000 (1,000 units) and a nominal value of Sh20 each. According to Anton Borkum, STANLIB Fahari I-REIT CEO, the STANLIB Fahari I-REIT will provide local and international investors with a diversified investment platform using a transparent and regulated environment.

“We are offering both retail and institutional investors a stable income stream with long-term growth and capital appreciation,” said Borkum.

Kenya’s real estate sector has been growing steadily over the past decade with investors favouring land over almost all asset classes owing to the good returns therein. Data from the Hass Consult property index released two days ago indicates that investors in Kenya are in fact scaling up their investment in land as currency shocks and high interest rates continue to take a toll on the country’s economy.

Investment in land, according to Hass Consult, has consistently outperformed other commodities having a return that is twelve times that of gold and 10 times that of cattle over the past seven years.

“Returns in land particularly in satellite towns like Athi River, Kiserian, Kitengela and Kiambu have become a key driver of demand, which has now become the new revenue stream for thousands of investments groups, co-operatives societies, learning institutions and individual investors,” said Sakina Hassanali, HassConsult’s Head of Research and Marketing.