Property investment continues to be a safe bet

Kenya’s booming property market is proving to be a popular investment option for most pension fund managers.

Pension scheme operators have been urged to invest more in property market that is considered the best-value platform for pension funds and offers better returns for its members.

The experts reckoned that given the growing value of property and because of high demand for offices, houses and business premises, the pension schemes are assured of stable returns on their investment for a longer period.

“The traditional investment platforms are fixed income such as bonds, bills, and equity, off-shore and alternative markets, (but) property investment remains a game changer for many schemes as the value never depreciate....The members gain through property valuations and steady income,” explained Octagon Managing Director, Mr Fred Waswa.

He said the property market remains one of the most stable investment vehicles for pension funds, especially in the advent of county governments, which has led to increase in demand.

Currently, Kenya’s regulatory framework allow spread in investment for pension fund managers to minimize investment risks.

Reginald Okumu, the Executive Director of Ark Consultants, say although fund managers avoid property because of 15 per cent capital gains tax charged on returns, in a long-run, the benefits from property still supersedes those from stock market. Octagon Africa Ltd, a provider of employee benefits services, property management, insurance brokerage and trainings for the public and private sector organisations and Ark Consultants, a real estate and property advisory service provider, have announced plans to hold a conference for pension trustees and property developers for East African region in Mombasa to explore new investment opportunities.

“The participants are expected from Kenya, Uganda, Tanzania and Zambia. We seek to rope in SMEs from the region (EAC) to encourage them enroll their employees for pension products so as to secure their future in retirement,” said Okumu.

He said the proposed forum would also provide an opportunity to fund trustees and real estate developers exhibit their products.

Currently, pension managers invest more in stock market, but analysts say there was need to diversify and property market offers the best bet.

Kenya’s booming property market is proving to be a popular investment option for most pension fund managers. It now rivals returns from the equity market.

Britam Insurance Regional Director Stephen Wandera was recently quoted as saying property sector is ranked top, closely followed by equities, which fared equally well against the backdrop of turbulent times on the global market.

“The property market has provided the best returns compared to equities,” said Wandera.

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