Real estate data needed for Reits

With Real Estate Investment Trusts set to debut in the Kenyan market by year-end, lack of regular, reliable data on property market trends may yet slow uptake of the new investment product. At a recent stakeholder seminar organised by the Capital Markets Authority, a section of real estate industry players expressed concerns that there lacks performance benchmarks to aid in investment performance evaluation and buyer decision making.

This is compounded by lack of well researched information by the Housing ministry and absence of a centralised property sales data bank at the Lands office. Consequently, valuers use information from diverse sources ending up with differing opinions on property values and return projections.

Daniel Cheruiyot, the head of property valuation at Regent Management, notes that valuation variance is common even in the developed world, but Kenya’s situation is exacerbated by lack of reliable property statistics. “Property data needs to be collected and real estate performance benchmarks developed for use in investment performance evaluation and factual property market forecasts,” he said.

Gikonyo Gitonga, CBRE Kenya managing director, said the market will soon realise that reliable data will be crucial to aiding analysis of investment performance and valuation of real estate. “I believe that transparency in the market will come and market forces will dictate for data to be readily available,” he said.“The Reit manager, property managers and valuers and all other players will see the need to share data so as ensure that there is enough information to guide valuers when they are undertaking valuations.”

The CMA said it is currently making arrangements with the Nairobi Securities Exchange (NSE) on the listing procedures for Reits schemes. Divisional director for KCB Mortgages Joram Kiarie said: “There will be small issues here and there in terms of getting all the information... but this will not be a significant problem as such. Things will fall into place once the Reits start listing at the NSE.”

He said Reits schemes will make most of the information needed by investors available in the Memorandum of Information (MoI) that’s usually required before listing at the NSE. “They must detail their expectations, cash flow, property portfolio they intend to invest in, how they intend to raise capital and average returns expected among other information,” said Kiarie. Reits schemes will be required to publish quarterly, half-year and annual reports and accounts where disclosures will be made including on return expectations.