Real estate prices in Kenya: is there a bubble?

Kibunyi, Duncan; Ndiritu, S. Wagura; Cárcel, Héctor; Gil-Alana, Luís A.

doi:10.1007/s10901-017-9541-x

Cited by 16 publications

(15 citation statements)

References 39 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…As mentioned earlier, the analysis of housing market bubbles is based both on the prices themselves (see, e.g., Kibunyi et al, 2017 ; Chen & Chiang, 2020 ; Coskun et al, 2020 ) but also on relational indicators, in particular the price-to-rent ratio (see, e.g., Mikhed & Zemcík, 2009 ; Yiu et al, 2013 ; Greenaway-McGrevy & Phillips, 2016 ; Zhang et al, 2017 ; Li et al, 2019 ; Clark & Lomax, 2020 ) or a price-to-income ratio (see, e.g., Fraser et al, 2008 ; Chen & Cheng, 2017 ; McMillan & Speight, 2010 ) in the absence of rental data. The use of the latter indicators is preferable because both housing prices and rents can exhibit explosive behaviour over the same period, making it difficult to conclude on the existence of a bubble when based solely on prices.…”

Section: Introductionmentioning

confidence: 99%

Identification of house price bubbles using robust methodology: evidence from Polish provincial capitals

Tomal

2021

J Hous and the Built Environ

View full text Add to dashboard Cite

This article aims to check whether there has been a price bubble in the Polish major housing markets in recent years. To accomplish this goal, the log price-to-rent ratios in Polish provincial cities were analysed. In order to avoid incorrect conclusions, the log price-to-rent ratio using the instrumental variable estimation and ordinary least squares methods was decomposed into two components: fundamental and non-fundamental. The latter was then examined using the Phillips, Shi, and Yu procedure to detect explosive and downward movements. The results of the study showed that, in general, over 2011, actual log price-to-rent ratios in the analysed cities were below their fundamental values, i.e., a negative price bubble existed. However, more or less since the beginning of 2013, the surveyed markets have seen an increasing level of the non-fundamental component of the index under study, and its particularly explosive movements are visible in the first quarters of 2014. Finally, this analysis indicated future research directions and study implications for Polish policy-makers, housing investors, and households.

show abstract

Section: Introductionmentioning

confidence: 99%

Identification of house price bubbles using robust methodology: evidence from Polish provincial capitals

Tomal

2021

J Hous and the Built Environ

View full text Add to dashboard Cite

show abstract

“…Having noted this gap, this current study evaluated influence of private equity on growth of real estate in Kenya. Kibunyi, Ndiritu, Carcel, and Alana (2017) examined the factors that influenced house prices in Nairobi. In addition, the study used causality test in order to report whether there existed a bubble in prices of houses.…”

Section: Private Equity and Growth Of Real Estate Developmentmentioning

confidence: 99%

Financing Options and Growth Rate of Real Estate Development Companies in Kenya

Njoroge¹,

Koori²,

Warui³

2021

IJCFA

View full text Add to dashboard Cite

Financing decisions have been a challenge to real estate developers in Kenya. This is because, real estate investments are perceived to be capital intensive in nature. It is expected that real estate sector should develop in line with population increases which characterises most emerging economies. However, the provision of housing units per year is below the demand. In Nairobi region the demand for housing is 200,000 units per year while the actual production is estimated to be 50,000 units annually thus outlining a shortage of 150,000 units. Past studies indicate that where a robust financial market prevails, investors are able to access funds for investment projects. This current study seeks to establish the effect of financing option on real estate growth in Kenya. The specific objectives were; to determine the effect of mortgage financing on growth rate of real estate development companies in Kenya, to find out the effect of retained earnings on growth rate of real estate development companies in Kenya, to establish the effect of private equity on growth rate of real estate development companies in Kenya, to determine the effect of joint venture on growth rate of real estate development companies in Kenya and assess the moderating effect of firm size on relationship between financing options and growth rate of real estate development companies in Kenya. This study was be anchored by the following theories namely: lien theory of mortgages, pecking order theory, transaction costs theory, resource dependency theory and housing cycle theory. The target population of this study comprised of all the seventy-two companies who are members of the Kenya Property Developers Association (KPDA). The sample size comprised of twenty three companies which was thirty percent of the sample frame. The sample size was selected using simple random sampling design. This study used descriptive research design with a regression model with the regressor being real estate growth rate which was expressed in growth rates of housing units for each firm. Therefore, this study followed panel data analysis as individual firm data was collected for a time span of five years 2014 to 2018. Results showed that mortgage financing positively but insignificantly affected growth rates of real estate development companies in Kenya. Further results showed that retained earnings as source of financing option impaired significantly growth rates of real estate development companies. Private equity was found to improve growth rates of real estate development companies significantly. Joint venture too positively but insignificantly influenced growth rates of real estate development companies in Kenya. Lastly, firm size was found to be a non-moderator but rather an explanatory variable and impaired growth rates in a significant manner. This study recommended that real estate development companies should increase use of private equity in financing housing projects as this increases growth rates of the entities.

show abstract

“…In 2013, its contribution to sources of growth for GDP was standing at 4.8% up from 2.8% six years earlier. Real estate has, therefore, become a centre of focus for many investors, both local and foreign (Kibuyi, Ndiritu, Carcel, & Gil-Alana, 2017).…”

Section: Local Perspective Of Risk Management Of Real Estate Entrepreneurial Investmentsmentioning

confidence: 99%

Effect of Environmental and Political/Legal Risk Management on Performance of Commercial Real Estate Entrepreneurial Investments in Kenya

Mbugua¹,

Otuya²,

Muhanji³

2020

IJARBSS

View full text Add to dashboard Cite

The study adopted a descriptive survey design having a quantitative approach. The target population for this study was 9,320 real estate entrepreneurs comprised of 884, 95, 320 and 8,021 sourced from Softkenya directory, Kenya Developers Association, Estate Agent Registration Board and National Construction Authority respectively and having their registered offices in Nairobi, Nakuru, Kisumu and Eldoret. A sample size of 384 real estate entrepreneurs was selected and using a stratified random sampling procedure, them that participated in the study were identified and later served with online questionnaires using their emails. The primary data that was collected then analyzed descriptively and inferentially. Environmental risk management was found to a have a statistically significance effect on performance of commercial real estate entrepreneurial investments in Kenya. It further reveals that incomplete environmental analysis and unpredictable weather patterns were the two most frequent and severe sources of environmental risk. Political/legal risk management was however found not to have a statistically significant effect on the performance of the entrepreneurial investments. The study recommends the need by the concern authorities to enforce full compliance of environmental requirements before any entrepreneurial investment commences and throughout its life cycle and aided by real estate entrepreneurs and other stakeholders should further scrutinise all approvals that an entrepreneur requires with a view to determine the viability in the long run of the number of approvals as well as the number of

show abstract

Real estate prices in Kenya: is there a bubble?

Cited by 16 publications

References 39 publications

Identification of house price bubbles using robust methodology: evidence from Polish provincial capitals

Identification of house price bubbles using robust methodology: evidence from Polish provincial capitals

Financing Options and Growth Rate of Real Estate Development Companies in Kenya

Effect of Environmental and Political/Legal Risk Management on Performance of Commercial Real Estate Entrepreneurial Investments in Kenya

Contact Info

Product

Resources

About