| dc.description.abstract | Real estate sector has gained a lot of interest from investors with the perceived high returns.
Kenyan government has on the other hand recently capped interest rates on loans. Considering
that most investors relied on mortgage financing to invest in real estate sector, the investors have
to consider other sources of financing. Venture capital financing on the other hand has left some
investors shortchanged by the venture capitalists. This study sought to establish the impact of
financing sources on real estate sector’s performance in Nairobi County, Kenya. The specific
objectives were: to investigate the effect of mortgage financing on the performance of the real
estate sector in Nairobi County, Kenya; to determine the effect of venture capital financing on
the performance of the real estate sector in Nairobi County, Kenya and to determine the effect of
equity financing on the performance of real estate sector in Nairobi County, Kenya. The study
reviewed theories relevant to financing sources and performance namely; pecking order theory,
trade off theory and agency theory. Descriptive research design was adopted. The study
population was 64 real estate developers registered with Kenya Property Developers Association
in Nairobi County, Kenya. The study conducted a census of all 64 real estate developers. The
study used primary data. Questionnaires were utilized to collect data. Data was analyzed by
multiple linear regressions and presented in form of frequency tables and charts and proper
inferences made towards the same. The study found out that performance of real estate sector in
Nairobi County, Kenya was significantly affected by mortgage financing which was statistically
significant with a p value of 0.001.The relationship between venture capital financing and
performance of real estate sector in Nairobi County, Kenya was positive, however, the
relationship was statistically insignificant with a p value of 0.526.The study also found out that
even though the relationship between equity financing and performance of real estate sector in
Nairobi County, Kenya was positive, the relationship was statistically insignificant with a p
value of 0.472. The study concluded that performance of real estate sector in Nairobi County,
Kenya was significantly affected by mortgage financing which was statistically significant. The
study also concluded that venture capital financing insignificantly influenced performance of real
estate sector in Nairobi County, Kenya. The study further concluded that the relationship
between equity financing and performance of real estate sector in Nairobi County, Kenya was
statistically insignificant. The research recommends that in order for the investors to maximize
returns on their real estate investments, they should adopt strategies such as increasing mortgage
financing up to an optimal point since it has the highest returns as compared to other financing
sources. The research further recommends that to reduce risks associated with venture capital
financing, investors should undertake some mitigation steps like assessing and evaluating
potential investment targets regarding risk and return. Similarly, the research recommends that
real estate companies should consider raising equity through private placements as opposed to
public placements. | en_US |
