The Capital Markets Authority (CMA) is in the final stages of developing Real Estate Investment Trusts (REIT). REIT is a framework that will facilitate the financing and management of collective investment in real estate run by CMA.

The Capital Markets Collective Investment Scheme Regulations 2012 seeks to encourage more individuals and corporate bodies to invest in real estate projects. According to the acting CEO of Capital Markets Authority Paul Muthaura, the retail REITS will be in form of a collective scheme structure that would allow low end developers will pool their funds to get a property which will be listed and their shares in the property trade freely at the Nairobi Securities Exchange (NSE).

Muthaura says the framework will address funding challenges in the real estate sector thus help mobilize savings in real estate. “We are going through a very significant property boom in the country. The nature of the property sector needs very high investments because if you do not have several millions, it will be hard to invest. But through this kind of a collective structure, we will allow investors at smaller portions to partake of this,” said Muthaura.

According to the draft regulations, to qualify for listing at the NSE, each REITs will be required to be worth at least KES300 million. In addition, no single investor is to own more than 25% of a REITs while a manager of REITs will be required to have invested at least KES50 million in the said REITs.

Stakeholders in the sector have up to July 21 to give their input on the draft framework before it is adopted by the CMA board. It will then be forwarded to the Ministry of Finance for approval.