Kenya has listed only one real estate firm on the Nairobi Securities Exchange in the past nine years.

The Capital Markets Authority (CMA) says real estate investment trusts (Reits) are facing punitive taxes, cumbersome and multiple land laws, restrictive regulatory regime in terms of compliance costs and high listing prices. Other negative factors include waning investor confidence in the stock market.

Poor first-hand experience in Reits investments, inadequate investor sensitisation and a struggling economy have hampered the growth of the sector.

“We have put together a legal framework that protects people who get into Reits. However, the challenge we have is taxation. Reits thrive where the tax system is favourable because you are making money on real estate. Many people who are interested in the Reits have raised the issue of taxation,” CMA’s chief executive Wycliffe Shamiah told The EastAfrican in an interview last week.

“In Reits, people are getting rental income or capital gains on property investments, which is sensitive to the taxation system. We have been in negotiation with the government and the Kenya Revenue Authority,” he added.

theeastafrican