Real Estate Investment Trusts (REITs) are gaining traction in Kenya. They are investment instruments backed by income-generating properties like apartments, offices, or hotels. The Real Estate Investment Trusts (REITs) launched in Kenya in 2015 with aim of developing the property market in the country.
Since their introduction, the Nairobi Securities Exchange has three Reits; Ilam Fahari I-Reit, Acorn development Reits and Acorn income Reits. Players in the industry are working to introduce new products such as Islamic Reits and Social Reits.
Einstein Kihanda CEO ICEA LION Asset Management said that the Ilam Fahari I-Reit, one of the first Reits in Kenya, currently has over 5,500 retail investors and a few institutional investors. The company is looking to attract more retail investors by engaging government and market regulators, through partnerships with other Reit providers, and by educating the public on the benefits of Real Estate Investment Trusts.
According to the REITs Association of Kenya, Reits have numerous benefits to investors including exemption from income tax, lower capital requirements, exposure to expertly managed properties, regular income stream, among others.
The government of Kenya is also working to attract investors to invest in Reits. In June this year, the Cabinet Secretary, National Treasury & Planning Ministry, Amb. Ukur Yatani announced the reversal of Value Added Tax (VAT) on asset transfers into Real Estate Investment Trusts (Reits).
“In order to entrench the benefit of affordable housing including specialised facilities like student hostels, it is imperative to develop innovative financing alternatives,” the Cabinet Secretary said in his budget speech.