How investors are enticed back into real estate developments
Real estate projects in Kenya have for the last few years witnessed scenarios where investors have lost their hard earned cash in property deals tat did not materialize as envisaged.
Humans have a nesting and homing instinct. Humans produce hormone estradiol, which, among other things, results in an uncommonly strong desire to organize and clean. Humans are territorial animals, with deep desires to mark and protect our territories. Every human being desires a home, hence amidst all the litigation happening in Real estate projects in Kenya, Kenyans still re demanding for houses. The negative publicity has not dented Kenyans’ need for land and housing.
Abraham Maslows hierarchy of human needs puts Shelter at the bottom, meaning that housing will always be in demand no matter the situations happening. No matter how many scandals appear on Kenyan real estate scene, Kenyans will always find different permutations and combinations to access housing for themselves.
Driving force of crowdfunding in real estate development. Investor decision dependence on crowdfunding initiatives
Crowdfunding is a method of real estate finance and development whereby land owner attracts investors who put in small fractions of the total whole project. This enables investors to own prime real estate without breaking the bank, literally. This financing method keeps banks and their high interest rates away from projects directly. Banks can play by financing individual investors with personal loans. In other projects, banks finance land owners with construction loans which are quite tedious in needed paper work and risky in case of default.
The ease of investment since the huge total construction cost is divided into small parts where many investors can afford, makes crowdfunding very marketable in Kenya.
‘Sponsor’ or ‘operator,’ reputation impact on the crowdfunding investment in real estate development.
The crowdfunding sponsor needs to be of impeccable reputation so as to enable investors feel confident to invest through them.
Consumer protection laws in Africa are generally very weak. Also, some unscrupulous real estate investors take advantage of the fact that neo colonization in Africa is still present , hence many Africans trusting projects that seem to be sponsored by Caucasians . Some have used this as a bait to fraud Africans eg in Ivory Coast.
In the recent case of Cytonn, it was evident that alot of investors usually don’t read the fine print before putting their money on the stake.
The amount of funds invested in real estate through crowdfunding.
Crowdfunding is quite new into the Kenyan Market. By now, Billions of shillings have already been invested ito crowdfunded real estate .
https://nation.africa/kenya/business/ponzi-cost-kenyans-sh1-billion-cma-reveals-3467100?view=htmlamp
Impact of crowdfunding initiatives in the marketing of real estate developments growth.Attitudes of the crowdfunding promoters in the real estate developments.
Crowdfunding will enable many more people participate in real estate. Before crowdfunding, only a few rich peole who could amass the hundreds of millions needed to invest in prime properties could play the real estate field in Kenya. With crowdfunding, the huge real estate projects are cut into smaller portions which are within financial reach of many Kenyans. This will impact on Kenyan real estate with most prime properties in urban areas of Kenya finding access to capital easier. Land buying into far off hinterlands which was a common way for investors to play into real estate will slowly give way to much better methods such as crowdfunding which have better and higher return on investments.
Architect Francis Gichuhi Kamau.
gichuhi@a4architect.com
0721410684
Leave a Reply