Real estate is an investment sector that has continued to grow both locally and internationally. Locally, its contribution to the country’s GDP has continued to grow for the past two decades, from 10.5% in 2000 to 13.8% in 2016, as per KNBS. The sector has also continued to be shaped by various trends such as infrastructural development, improving client preferences and tastes, a growing population as well as an expanding middle class, and the continued entrance of multinational firms who act either as clients or competitors, hence shaping the industry standards. As an investment asset class, real estate has toppled other investment asset classes in terms of returns and risk involved, and as a result, more individuals and institutional investors are shifting their focus on investments to real estate.
This is attributable to factors such as:
- High returns, as per our research, have averaged 25.0% per annum over the last five years as compared to traditional investment assets such as stocks and bonds which have generated an average of 14.6% per annum over the same period.
- Real estate provides investors with an investment platform for hedging funds against inflation.
- Secure tax incentives such as treatment of interest payment on mortgages as a tax-deductible expense.