EFFECTS OF ECONOMIC FACTORS ON PERFORMANCE OF REAL ESTATE IN KENYA

Mati Mugendi Loyford
Jomo Kenyatta University of Agriculture and Technology Department of Entrepreneurship and Procurement (EPD)
KENYA    

Dr. Makori Moronge
Jomo Kenyatta University of Agriculture and Technology Department of Entrepreneurship and Procurement (EPD)
KENYA

CITATION:Loyford,M.M.&Moronge, M. (2014).Effects of economic factors on performance of real estate in Kenya.EuropeanJournal of Business Management, 1 (11), 181-200.

ABSTRACT

Real estate market is an ideal sector for many investors to invest. Hence it is a sector that is an ideal venture for research due to the enormous interest it has on investors. The study reviewed the effects of economic factors on the performance of real estate in Kenya by reviewing the following areas; interest rate, inflation, transaction cost and demand for housing. The general objective of the study was to analyze the effects of economic factors on performance of real estate. With the scope of the study focusing on real estate market in Nairobi. The study is built upon major theoretical streams; Classical theory of interest rates, the liquidity preference theory of interest rate, the loanable funds theory of interest rates, and contextualizes the performance of real estate. Stratified sampling technique was used to select the sample from each stratum; the study used simple random sampling giving the study a sample population of 44 respondents from the target population which was believed to be a good representation of real estate market. Primary data was gathered using semi-structured questionnaires where the respondents were issued with the questionnaires. The questionnaires were self- administered among the sampled employees currently employed by real estate agents. Secondary data was gathered from past published scholarly articles explaining theoretical and empirical information on performance of real estate. Descriptive analysis was used enabling the generalization of large information. SPSS computer software was used for analysis to generate data. Qualitative data analysis method was applied in analysing the data that was gathered using open ended questions.From the study, the researcher can conclude that, interest rate, inflation, transactions cost and demand for housinghighly influence the performance of real estate industry. It can be settled that interest rate is stochastic in determining the performance of any property market. Therefore, the government should take a stake with the real estate industry to balance macroeconomic effects particularly the interest rate and inflation that highly affects the industry’s performance.

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