Listed real estate equities (Home Afrika and Stanlib Fahari I-REIT) continued to perform poorly on the Nairobi Securities Exchange in the second half of 2018. Stanlib Fahari I-REIT closed at Ksh 10.95 in December, which was 45% lower than its initial listing price of Ksh. 20.
This happened even as the country’s GDP growth of 5.7% in 2018 superseded that of 2017 (4.9%). According to property management firm Knight Frank’s market updates report, GDP growth is expected to reach 5.8% in 2019.
The low performance of listed property also happened despite an increase in diaspora remittances in 2018 compared to 2017. This is an indication that most diaspora remittances channeled towards real estate investments do not flow into listed real estate, rather diaspora investors act more independently on the market.
Home Afrika’s share price closed at Ksh. 0.68 in December, which was 94% lower than the initial listing price of Ksh. 12. The property developer announced in September plans to exit two of its ventures in Kisumu and Mombasa counties due to inadequate capital. It is currently in the process of seeking buyers to purchase the land in the Kisumu.
Lakeview project and is in negotiations with Lango investors to exit the Kwale Lango project. Home Afrika said it will use the funds generated from the project disposals to complete Migaa, a residential development located in Kiambu County.
The Capital Markets Authority has so far licensed 9 firms to operate Real Estate Investment Trusts (REITs) in the country. Last week, Cytonn Investments revealed that CMA had licensed the company’s affiliate, Cyton Assest Managers Limited, to operate a REIT in the country.
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