An assesment of the viability of real estate securitization in Kenya

Abstract

This research examines the attitudes of Kenyans towards real estate securitization. To a large extent the respondents' answers as to why there were no listed property companies seemed to mirror the findings of Kimura and Amoro (1996). Most felt that the stock exchange was not well understood by investors and particularly by entrepreneurs. Other reasons included the need for confidentiality largely so they did not have to pay all their taxes and the feeling that the stock exchange could understate their wealth for no concrete reason by having the shares of their properties trade at below their net asset value. Overwhelmingly professionals and ordinary investors said they would be ready to put their money in securitized real estate. However the readiness to invest in shares of property companies went down as the amount involved went up. Compared to owning a property most of the respondents favoured owning a rental house to shares in a property company. Individuals who controlled entities which own property were however hesitant to bring to the market their property holdings. A most interesting finding among collectively owned property organization officials is an extreme risk aversion. To a large extent, officials of property owning organization feel that an attempt to divest part of their holding to the public would be viewed as an attempt to benefit themselves by the other members, thi:..majority of whom did not understand the basics of investments. Any innovative actions on the part of these officials is always viewed with suspicion by the members. Even with the best intentions, any action not well understood by members results in accusations of corruption.