The Effect of Investor Sentiment on Real Estate Investment Decisions in Kenya

Abstract

Conventional theories of finance assume that investors rely on available fundamental information and make rational investment decisions based on the same, but in reality the scenario is different. Based upon the growing influence of behavioural finance the study is an attempt to investigate the effect of investor sentiment on the decision making of real estate investors in Kenya. The objective of the study was to establish the effect of investor sentiment on real estate investments decisions in Kenya. The study uses survey questionnaire to collect data targeting real estate investors within Nairobi region the data analysis was done using descriptive statistics, in which mean, mode, standard deviations, and variances were used. The logistic regression analysis was used to determine statistical relationship between the variables, SPSS application was used for analysis. All the target respondents were real estate investors who have invested in real estate. The study finds out that investor sentiment plays a role in influencing investment decisions of the real estate investor. It is evident from the findings of this study that majority of those who engage in real estate investment use past performance as an indicator of future performance when investing in property while other investors use news events and sentiment from peers when investing in the real estate market in Kenya. The study recommends that the real estate investors need to do an analysis of all the investment factors carefully using the reasonable business knowledge before making an investment decision. The investors should also strive to interpret the market and economic indicators since they influence the performance targets of the real estate market