The potential of real estate investment trust schemes for local institutional investors in Uganda.
MetadataShow full item record
REITS allow individuals to invest in large-scale, income producing real estate which includes office buildings, shopping malls, apartments, hotels, resorts, warehouses and mortgage or loans. In the world today, REITS are becoming increasingly popular however in Uganda the field is still largely not explored. This research aims to investigate the potential of Real Estate Investment Trust Schemes for local institutional investors in Uganda as a way through which individuals can invest in the local real estate industry which imposes a number of limitations on new investors. A combination of both quantitative and qualitative methods were used in the collection of data where a number of individuals affiliated to institutional investors were approached. Data was collected using either questionnaires or interviews where a total number of 40 respondents took part in the research. The research findings in chapter four reveal that a majority of the respondents are aware of the existence and operation of REITS where a majority would consider investing in them through their institutional investors once they were fully developed and introduced on the market. It was also revealed that those invested in REITS enjoy a number of benefits which include easy access to and ownership of real estate, investment diversification benefits, complementary to direct investment in real estate and an increased regular income. The study also revealed that investors are subject to various risks which include real estate portfolio risk, market and liquidity risk, interest rate risk, geographic concentration risk, structural and regulatory risk and general economic risk. The development of REITS would also lead to the development of the local real estate industry through the creation of a transparent and flexible market, professionally managed real estate and increased supply of real estate properties among other improvements. Much as REITS regulations were implemented by the CMA in Uganda, there are no licenced and registered schemes in the country. From this research, it was discovered that the low development of REITS as an investment vehicle is attributed to policy, operation and regulations, low awareness about REITS to investors or developers, understanding the operation of stock market, performance of local real estate industry, new legislation, development of the capital markets in Uganda and finally competition from other financial intermediaries.