Mososi, Gilbert Oyugi2026-03-192026-03-192025-11https://ir-library.ku.ac.ke/handle/123456789/32815A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Business Administration (Finance Option) of Kenyatta University, November 2025. Supervisor 1. Dr. James M. GatauwaInvestment in real estate is essential for reducing poverty, improving income distribution, creating job opportunities, and providing housing for households. Key investors were drawn to real estate, which is most likely to be a significant driver of economic growth. Recent evaluations indicate a shortfall of approximately 2.1 million housing units, particularly in the category of small and mid-sized dwellings, with nearly 51% of private households residing in informal settlements. This research aimed to examine the role of financial decision-making biases on the growth of commercial property investment enterprises. Specifically, the investigation focused on effect of heuristic biases on the growth of commercial real estate investment firms in Kenya, to evaluate the effect of prospect biases on the growth of commercial real estate investment firms in Kenya, to find the effect of herding biases on the growth of commercial real estate investment firms in Kenya and to establish the effect of market factors driven behavior on growth of commercial real estate investment firms in Kenya. The study was anchored on behavioral theory, heuristic constructs, and the theory of prospects. A descriptive approach was adopted as the study’s methodological framework. The target population comprised 69 commercial real estate organizations registered under the KPDA within Nairobi City County. From each organization, responses were obtained from five key managerial positions namely finance, property, residential site, and portfolio managers resulting in a respondent pool of 276 individuals. A sample of 164 managers was selected using a non probability convenience sampling method. Primary data was collected using structured survey instruments. Quantitative data analysis incorporated both descriptive statistics including averages, deviations, percentage distributions, and frequency counts and inferential techniques. Data processing and interpretation were executed using SPSS software, version 22. Regression coefficient analysis revealed that heuristic bias exhibited a statistically significant and negative impact on the expansion of commercial property investment enterprises within Nairobi City County, Kenya (β = -0.225, p = 0.018). Further regression outcomes indicated that prospect bias also demonstrated a negative and significant association with firm development in Nairobi City County’s commercial real estate sector (β = -0.211, p = 0.012). Additionally, the analysis showed that herding bias was negatively and significantly related to the progress of commercial real estate investment firms (β = -0.235, p = 0.013). Finally, it was discovered that behavioral distortions associated to the market had a negative and significant impact on the expansion of commercial real estate businesses (β = -0.184, p = 0.043). The study concluded that recognizing these psychological patterns is essential for enhancing investment decisions and accurately assessing property values. Furthermore, it was observed that Kenyan real estate investors exhibit greater sensitivity to losses than satisfaction from gains, often opting for caution in gain-related decisions and risk-taking in loss scenarios. Moreover, investor trust is more commonly placed in peers and acquaintances rather than in professional agents. To address the adverse effects of heuristic decision-making, property managers are encouraged to identify and counteract prevalent biases such as anchoring, selective recall, and confirmation tendencies. The research also advised managers to avoid excessive dependence on initial or less relevant information when making strategic decisions.enThesis