Real Estate Revolution: How to own land with less than Sh50,000

In Kenya land is considered the most profitable investment that involves little to no risk, and that is the reason people are scrambling to get a piece of it.

However, truth be told, not many people are lucky or wealthy enough to own a sizeable chunk of land in Kenya today. Land is also a major issue in Kenya, if the land grabbing scandals and killings in West Pokot and its environs are anything to go by.

Land is no longer sacred, blood has been shed on and over it while family members disown their kin over land and the rich grab the ground from under the poor man’s feet.

Since land is expensive, many youths have been unable to buy and are left with huge debts if they do. Unless one has inherited land, buying land can be an expensive venture. Which is why I was happy with the unveiling of Kenya’s first listed real estate property fund, Stanlib Fahari I-REIT (Real estate Investment Trust).

What is it?

It is a real estate investment scheme, a collective investment scheme that allows investors to pool their funds in a portfolio of properties consisting of; manufacturing facilities, residential property, schools, large-scale commercial property, for a return.

When the initial public offer (IPO) was made, I got an opportunity to interact with a few individuals and the questions were similar, is it a worthy investment? What are the risks attached to it?

Well, truth be told most investors and successful business people are risk takers. They do not sit and wait for the right time to invest, they look for the perfect time. Here is a good opportunity that has been presented to us, imagine owning a piece of KICC, well am in awe, food for thought.

Stanlib is a pan African multi-specialist investment company that manages over USD46 billion in assets across Africa according to the financial records as at 30th June 2015. The I-REIT offers capital growth for investors by investing atleast 75 percent of the total asset value in real estate in Kenya’s strategic locations and also in cash-like investment instruments.

How to invest

This is a worthy investment opportunity for the youth to consider and take advantage of, the units are now only traded through the Nairobi Securities Exchange after the IPO closed in November. Interested investors should go through a licensed stockbroker at the floor of the NSE.

This will be same as trading in shares at the NSE, the market prices will be driven by the market forces. The minimum investment rate of return is set at 14 per cent per annum, which is a safe bet. Also worth noting is that the more the investment amount the more the interest upon maturity, meaning if you invested Sh20,000 you cannot expect the same amount of interest as someone who invested Sh1 million.

The product has faced skepticism from Kenyan investors as evidenced with the change of dates of IPO closure from November 12 to 18.

My advice is before investing in any product do thorough research, consult specialists in that field if you can, which is easy considering the fact that major investment companies are offering free investment advise.

Notably, the decision should be based on rate of return of your investment, is it a worthwhile investment? The underlying risks associated with your investment, the time horizon; is it a short-term or long-term investment? In this case it would be long–term. Never be misled to invest in a scheme that will not satisfy your needs.

Key notable advantages

The income returns are predictable and less volatile because investors gain through capital appreciation and through rental incomes. As Kenyans we know that rent prices rise almost every year, which in this case would be a good scenario for you as an investor since it offers a stable income stream.

The ability and transparency to buy units and sell also makes accessibility easier and convenient.

Returns are consistent because rentals units are in demand in Kenya hence a consistent stream of rental incomes.

However, if locked out of this deal, you can consider investing in the other companies set to issue REITs soon, including Centum Investments, which has intentions to issue a REIT on the TWO-RIVERS building in Runda estate with estimated rental yields of up to 14 per cent per annum. Housing Finance Corporation also has showed interest in issuing a REIT. This is the revolution good people open your eyes and ears, good things ahead.






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