Business
New window of opportunity in real estate
Apartments under construction in Nairobi. Many property experts are sharpening their skills ahead of the new regulations. Photo/FILE
Posted Monday, November 9 2009 at 00:00
Kenya’s property market players are positioning themselves for a major investment window the government is about to open by allowing the floating of property shares on the stock market.
The EastAfrican has established that a number of valuers and property managers in major towns like Nairobi are already putting in place, or upgrading, the necessary infrastructure —office space, equipment and staff.
Yet others are acquiring new skills and developing other necessary tools in readiness for the launch of new regulations on Real Estate Investment Trusts by the Capital Markets Authority.
Industry sources say experts are sharpening their skills in key areas like data collection, analysis and dissemination; portfolio management; and mass valuation techniques.
The Real Estate Investment Trusts Regulations will open up investment in the capital-intensive large-scale commercial property sector to the general public.
It will allow individual investors to buy and sell shares of properties listed on the bourse in much the same way people trade in stocks and shares of companies listed on the stock exchange.
This will be the first time in Kenya that real estate will be “chopped up” into small units for people to trade in.
According to the draft Real Estate Investment Trusts Regulations, large investors will be allowed to raise money through the capital market, making it possible to channel capital into the real estate sector in a more structured manner.
They will be required to register a real estate investment trust under the Trustee Act, Cap 167, with the Capital Markets Authority.
The trust will raise capital from the market and invest it in real estate projects on behalf of shareholders with the aim of providing returns to unit holders.
The returns will mainly be in the form of rental income or capital gains accrued from the real estate investment.
A real estate investment management company, incorporated under the Companies Act Cap 486, and registered with the Capital Markets Authority, will manage the investment schemes acquired by the Trust on behalf of the investors.
Properties acquired by the trust and managed by the company will be listed on the stock exchange, where members of the public wishing to invest in real estate will have the opportunity to buy shares and trade in them.
The introduction of the rules will result in a liquid property market that is widely accessible to the private investor.
Those wishing to invest in the schemes will require the services of valuers to determine their interest in the investment.
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