Housing trusts plan fails to get off the ground

Still, no word is out on how soon they will become a reality in the local capital market.

“We’re still hoping that the market regulators will come up with guidelines on how real estate management companies can list the REITs,” said Joe Macharia, managing director at Bora Capital.Bora Capital. It was among the first property development firms to announce plans for the provision of REITs.

By June, 2008, the NSE and Capital Markets Authority (CMA) were expected to announce specific guidelines for a real estate Collective Investment Scheme (CIS) which best captures the local property market trends to include an organisation’s composition, market capitalisation and the process of listing of such REITs.

Under the current stipulations, there is no differentiation of CISs based on the nature of the investments they target.

Among the proposals was to have investment units in fund management firms that would specialise in REITs and the requirement to have such a fund run by a Real Estate Investment manager.

The Kenyan real estate market favours highly liquid cash buyers who are looking for an opportunity for buy- to let as opposed to those who take mortgage loans for home ownership.

Several local investors and international real estate think tanks have in the past cited REITs as the best ways to open up the capital tied up in property to spur real estate development.

Best remembered is Darin Gunesekera, an expert in low cost housing development who earlier in the year said such a guideline would encourage investment in low cost housing units in urban centres.