Financial Behavioral Biases and Growth of Commercial Real Estate Investment Firms in Nairobi City County, Kenya
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Date
2025-11
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Volume Title
Publisher
International Journal of Finance and Accounting
Abstract
Purpose: The study aimed to examine the influence of
financial behavioral biases on the growth of
commercial real estate investment firms in Nairobi
City County, Kenya. It specifically focused on
assessing how heuristic biases, prospect-related
tendencies, herding behavior, and market-influenced
decision-making affect firm expansion within the
commercial real estate sector.
Methodology: A descriptive research design was
employed, targeting 69 commercial real estate firms
registered under the Kenya Property Developers
Association (KPDA). From these firms, 276 key
managers—finance, property, residential site, and
portfolio managers—were identified as the target
population. Using non-probability convenience
sampling, 164 managers were selected to participate.
Primary data were collected using structured
questionnaires. Data analysis was conducted using
SPSS version 22, employing both descriptive statistics
(means, frequencies, percentages) and inferential
statistical techniques.
Findings: The study found that financial behavioral
biases significantly and negatively influence the
growth of commercial real estate investment firms.
Investors demonstrated heightened sensitivity to
losses compared to gains and displayed a tendency to
rely on peer influence rather than professional advice.
These biases contributed to suboptimal investment
decisions and inaccurate assessments of property
values.
Unique Contribution to Theory, Practice and
Policy: The study reinforces behavioral theory,
heuristic constructs, and prospect theory by
demonstrating their applicability in explaining
decision-making behavior among real estate investors
in emerging markets such as Kenya. The findings
highlight the need for training managerial staff to
identify and mitigate heuristic and cognitive biases,
improve the quality of investment decisions, and
minimize reliance on irrelevant or misleading
information. The study recommends establishing a
government-led regulatory authority to formulate
comprehensive guidelines and oversight mechanisms
aimed at enhancing investor education and promoting
informed decision-making. Adoption of these
measures is expected to support sustainable growth in
Kenya’s real estate sector.
Description
Research Article
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Citation
Gilbert Oyugi Mososi, & Dr James Gatauwa, PhD. (2025). FINANCIAL BEHAVIORAL BIASES AND GROWTH OF COMMERCIAL REAL ESTATE INVESTMENT FIRMS IN NAIROBI CITY COUNTY, KENYA. International Journal of Finance and Accounting, 10(2), 1–33. https://doi.org/10.5281/zenodo.17650215