REITs Explained — Real Estate Investing Without Buying Land
Want real estate exposure but can't afford a plot? REITs let your chama invest in property for as little as KES 20 per unit.
Real estate is the most desired investment in Kenya. It's also the most capital-intensive. A decent plot costs millions. But what if your chama could own a piece of a shopping mall, office building, or residential complex for KES 20?
That's what a REIT (Real Estate Investment Trust) offers.
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What Is a REIT?
A REIT is a company that owns, operates, or finances income-producing real estate. It's listed on the stock exchange like a regular share. When you buy REIT units, you own a fraction of a real estate portfolio.
Kenya currently has two listed REITs:
- ILAM Fahari I-REIT — listed on NSE, invests in commercial property
- Acorn Student Accommodation I-REIT — invests in student housing (D-REIT and I-REIT structures)
How REITs Work
- The REIT collects rent from its properties
- By law, it must distribute at least 80% of income as dividends
- You receive dividends proportional to your units
- Unit prices fluctuate on the stock exchange (capital gains/losses)
REIT vs Physical Real Estate
| Factor | Physical Land | REIT |
|---|---|---|
| Minimum investment | KES 500,000+ | KES 400+ |
| Liquidity | Months to sell | Sell in days |
| Management | You handle everything | Professional managers |
| Diversification | One property | Portfolio of properties |
| Transaction costs | 4-10% (stamp duty, legal, agent) | 1-2% (broker commission) |
For Your Chama
REITs offer real estate exposure without the hassle and capital requirements of buying physical property. Start with a small allocation and learn how they perform before committing more.