Influence of investor awareness on performance of real estate investment trusts in Kenya

Abstract

Purpose- The performance of the listed REITs has not been as expected and efforts by REIT managers to issue more real estate securities have been slow. This posed the concern of whether the unexpected performance of REITs in Kenya was due to external factors, such as investor awareness, which is not under the control of the investment market. Thus the study sought to examine how investor awareness influences performance of REITs in Kenya. Methodology- Predictive correlational research design was employed while target population comprised of Fund Managers, Stock Brokers and Investment Banks and Property Developers. Structural Equation Modelling was used to test the hypothesized relationships at 5% significance level. Findings-The results indicate that investor awareness have no significant influence on performance of REITs in Kenya. Majority of the respondents agreed that they were knowledgeable about Kenya's real estate market, and their membership in the REITs Association of Kenya has provided insightful market research and databases. Such investors can access with ease reports of the REITs issuing firm. Further, although investors usually follow and update themselves on the REITs markets through the online platform, such awareness does not influence the level of performance of REITs in Kenya. Conclusions- It can be concluded that although efforts have been put in place to ensure investors' awareness of real estate securities, such efforts have not boosted the uptake of REITs among investors. Investor awareness efforts employed by Capital Markets Authority in conjunction with the REITs Association of Kenya are not likely to enhance the performance of REITs in Kenya. The results indicate that REITs uptake has not attained a critical mass necessary to create liquidity in the capital market. Based on the findings, there is minimal publicity campaigns carried on by the Capital Markets Authority to sensitize potential investors on REITs. Keywords: Investor awareness, performance of REITs, property market. JEL Codes G40, R30, C12, C51, L21