Critical Factors and Real Estate Development by Private Developers in Kiambu County, Kenya
Muiruri, Christine Wambui
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The real estate sector in and which was previously dominated by individual developers has now seen entry of more institutional developers such as SACCOs, private equity firms and foreign institutions in major towns around the country. The industry however continues to face challenges such as unfavorable interest rate environment and rapid population growth which is creating increased demand for housing, as families grow and consumer needs change to reflect independent living. It is in this light that this study sought to investigate the critical factors of real estate development by private developers. The study’s specific objectives were to: assess the role of access to finance; evaluate the role of off-site infrastructure; analyze the influence of land regulation and; examine the effect of technical innovation on real estate development by private developers in Kiambu County. Using descriptive research design, the study targeted 280 respondents that consisted of 120 finance managers and 120 engineers drawn from 18 registered real estate development firms as well as 20 land officials and 20 planning officials from Kiambu County. Using stratified random sampling procedures, the study sampled 84 participants that consisted of 36 finance managers, 36 engineers, 6 land officials and 6 planning officials; however, only 69 participants fully responded to the questionnaires. Data analysis was done using descriptive statistics and regression analysis methods. The study established that access to finance, offsite infrastructure, land regulation and technical innovations have a positive and significant effect on real estate development by private developer in Kiambu County, Kenya. The study concludes that various factors play significant roles in access to finance for development by private developers, among them availability of sources of obtaining finance, security requirements, eligibility requirements and interest rates. Offsite infrastructures significantly affect real estate development by private developers and increases in the activities involving offsite infrastructures would most likely reduce real estate development by private developers. The study concludes that land regulations significantly affect real estate development and that increases land regulations promotes real estate development by private developers. The study further concludes that technical innovation significantly affects real estate development and that increases in technical innovation promote real estate developments by private developers. On access to finance this recommends that the banking institutions needs to come up with appropriate policy framework that supports and promotes private developers efforts in reducing the housing gap in the country. On offsite infrastructure, the study recommends that the County government of Kiambu County should improve the road condition, provide communication infrastructure, availability of drainage systems, the presence of social amenities and the availability of water and power supply so as to improve real estate development in the county. On land regulations, this study recommends that the county government should up its game on land policy so as to make land acquisition, approval, and transfer efficient in order to promote real estate development. On technical innovations, this study recommends that there is need for policy making it mandatory for investors to use new technologies and technological tools to promote effectiveness and efficiency in real estate development.