The effect of financing sources on real estate development in Kenya

Abstract

The purpose of this study was to establish the sources of financing real estate in Kenya. In specific terms the study reviewed whether financing in the real estate originates from; mortgage financing, savings, venture capital and equity financing.This study also employed descriptive survey design since it is conducted to describe the present situation, what people currently believe, what people are doing at the moment and so forth. The population of this study wasall the real estate firms in Nairobi. This study used secondary data for five years. Data was analyzed using Statistical Package for Social Sciences (SPSS) and results were presented in frequency tables and charts. The data was then analyzed in terms of descriptive statistics like frequencies, means and percentages. The findings indicated that mortgage financing is the most used source of financing, with equity and venture capital being the least source of financing used. The findings also indicated that there is a significantly positive relationship between mortgage financing and real estate development. However the findings recommended that to increase use of equity and venture capital as a source of financing will require businesses to sell their ideas to people who have money to invest.Equity and venture capital financing can be a good source of financing but with combining them with other sources of financing. Further research should be on the effects of sources of financing in unsuitable economic conditions, political instability and a global economic crisis and internal and external factors that affect the decision on sources of financing for real estate firms in Kenya. Carrying out this study will analyze decisions on the best methods to source for finances during such times and will also analyze critical factors that managers ought to consider in order to make their decision on sources of financing yield successful results.