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FACTORS AFFECTING THE GROWTH OF REAL ESTATE INVESTMENT
COMPANIES IN KENYA: A CASE OF PREMIER REALTY LIMITED
BY
CATHERINE NKIROTE MBURUGU
UNITED STATES INTERNATIONAL UNIVERSITY- AFRICA
SUMMER, 2019
i
FACTORS AFFECTING THE GROWTH OF REAL ESTATE INVESTMENT
COMPANIES IN KENYA: A CASE OF PREMIER REALTY LIMITED
BY
CATHERINE NKIROTE MBURUGU
A Research Project Submitted to the Chandaria School of Business in partial
fulfillment of the Requirement for the Degree of Master of Business Administration
UNITED STATES INTERNATIONAL UNIVERSITY
USIU-AFRICA
SUMMER 2019
ii
STUDENT’S DECLARATION
I, the undersigned, declare that this is my original work and has not been submitted to any
other institution, or university other than the United States International University –
Africa in Nairobi for academic credit.
Signed: Date:
Catherine NkiroteMburugu (ID No: 610599)
This research project report has been presented for examination with my approval as the
appointed supervisor.
Signed: Date:
Dr.Peter Kiriri.
Signed: Date:
Dean, Chandaria School of Business
iii
COPYRIGHT
Copyright © Catherine NkiroteMburugu, 2019
All rights reserved. No part of this research project report may be photocopied, recorded
or otherwise reproduced, stored in retrieval system or transmitted in any electronic or
mechanical means without prior permission of USIU-A or the author
iv
LIST OF TABLES
Table 3.1: Population Distribution ..................................................................................... 22
Table 3.2: Sample Size Distribution .................................................................................. 24
Table 4.1: Response Rate ................................................................................................... 28
Table 4.2: Years of Dealing with Real Estate .................................................................... 31
Table 4.3: Income per Month............................................................................................. 32
Table 4.4: Customer related factors on Growth of Real Estate ......................................... 33
Table 4.5: Correlation Matrix between Customer related Factors and Growth of Real
Estate .................................................................................................................................. 34
Table 4.6: Model Summary for Effect of Customers related Factors and Growth of Real
Estate .................................................................................................................................. 35
Table 4.7: Regression Coefficient for Effect of Customers related Factors and Growth of
Real Estate ......................................................................................................................... 35
Table 4.8: Socio-demographic Factors related to the Growth of Real Estate .................... 37
Table 4.9: Correlation Matrix between Socio-demographic Factors and Growth of Real
Estate .................................................................................................................................. 38
Table 4.10: Model Summary for Effect of Customers related Factors and Growth of Real
Estate .................................................................................................................................. 38
Table 4.11: Regression Coefficient for Effect of Socio-demographic Factors and Growth
of Real Estate ..................................................................................................................... 39
Table 4.12: Managerial Factors/ Practices related to Growth of Real Estate .................... 40
Table 4.13: Correlation Matrix between Managerial Factors/ Practices and Growth of
Real Estate ......................................................................................................................... 41
Table 4.14: Model Summary for Effect of Customers related Factors and Growth of Real
Estate .................................................................................................................................. 42
Table 4.15: Regression Coefficient for Effect of Customers related Factors and Growth of
Real Estate ......................................................................................................................... 42
Table 4.16: Growth of Real Estate ..................................................................................... 43
Table 4.17: Results of Regression of Independent Variables against Growth of Real
Estate .................................................................................................................................. 45
v
LIST OF FIGURES
Figure 4.1: Gender of the Respondents.............................................................................. 29
Figure 4.2: Type of Customer ............................................................................................ 29
Figure 4.3: Age of the Respondents ................................................................................... 30
Figure 4.4: Level of Education .......................................................................................... 31
vi
TABLE OF CONTENTS
STUDENT’S DECLARATION ................................................................................................ ii
COPYRIGHT .............................................................................................................................. iii
LIST OF TABLES ...................................................................................................................... iv
LIST OF FIGURES .................................................................................................................... v
ABSTRACT ............................................................................................................................... viii
CHAPTER ONE .......................................................................................................................... 1
1.0 INTRODUCTION ................................................................................................................. 1
1.1 Background of the Study ............................................................................................ 1
1.2 Statement of the Problem ........................................................................................... 5
1.3 General Objective ....................................................................................................... 6
1.4 Specific Objectives ..................................................................................................... 6
1.5 Significance of the Study ........................................................................................... 6
1.6 Scope of the Study...................................................................................................... 7
1.7 Definition of Terms .................................................................................................... 8
1.8 Chapter Summary ....................................................................................................... 8
CHAPTER TWO ......................................................................................................................... 9
2.0 LITERATURE REVIEW ................................................................................................... 9
2.1 Introduction ................................................................................................................ 9
2.2 Customer Related Factors on the Growth of Real Estate Companies ........................ 9
2.3 Effect of Socio-demographic Factors on the Growth of Real Estate ....................... 12
2.4 Effect of the Managerial Practices on the Growth of Real Estate Companies. ........ 16
2.5 Chapter Summary ..................................................................................................... 20
CHAPTER THREE .................................................................................................................. 21
3.0 RESEARCH METHODOLOGY .................................................................................... 21
3.1 Introduction .............................................................................................................. 21
3.2 Research Design ....................................................................................................... 21
3.3 Population and Sampling Design ............................................................................. 21
3.4 Data Collection Methods .......................................................................................... 24
3.5 Research Procedure .................................................................................................. 25
3.6 Data Analysis Methods ............................................................................................ 27
3.7 Chapter Summary ..................................................................................................... 27
CHAPTER FOUR ..................................................................................................................... 28
4.0 RESULTS AND FINDINGS ............................................................................................. 28
4.1 Introduction .............................................................................................................. 28
4.2 Response Rate .......................................................................................................... 28
4.3 Demographic Information ........................................................................................ 28
4.4 Customer related factors on Growth of Real Estate ................................................. 32
4.5 Socio-demographic Factors related to the Growth of Real Estate ........................... 36
4.6 Managerial Factors/ Practices related to Growth of Real Estate .............................. 40
4.7 Growth of Real Estate .............................................................................................. 45
vii
CHAPTER FIVE ....................................................................................................................... 48
5.0 DISCUSSIONS, CONCLUSIONS AND RECOMMENDATIONS ........................ 48
5.1 Introduction .............................................................................................................. 48
5.2 Summary .................................................................................................................. 48
5.3 Discussion of the Results ......................................................................................... 50
5.4 Conclusions .............................................................................................................. 53
5.5 Recommendations .................................................................................................... 55
REFERENCES ........................................................................................................................... 57
APPENDICES ............................................................................................................................ 62
APPENDIX I: LETTER OF INTRODUCTION ..................................................................... 62
APPENDIX II: QUESTIONNAIRE ......................................................................................... 63
APPENDIX III: KREJCIE AND MORGAN (1970) GUIDE FOR SAMPLE SIZES ....... 70
viii
ABSTRACT
The general objective of this study was to examine the factors affecting the growth of real
estate investment companies in Kenya a case of Premier Realty Limited. The study
specifically established customer, socio-demographic factors and managerial factors/
practices that influence the growth of real estate at Premier Realty Limited.
The study used a descriptive survey design. In this study, the target population were
customers who purchase land, customers on whose behalf the company manage their
rentals and the customers in the form of agencies that is clients who want to sell their
property. The target population was a customer base of 2700 respondents. The population
was stratified into three categories with different characteristics i) Customers who
purchase land –this is where the company buy large parcels of land sub divide and sell to
clients and has a population of 2140 respondents ii) Rentals and Management- these are
customers on whose behalf the company manage their rentals and has population of 472
respondents. Finally iii) Agency -customers in the form of agencies: this is where the
company has clients who want to sell their property thus they bring the same to sell on
their behalf and for a commission, their population is 88 respondents
In terms of sampling, the study first of all stratified the customers according to their
categories of either customers who purchase land, customers on whose behalf the
company manage their rentals and the customers in the form of agencies that is a clients
who want to sell their property; then randomly sampled each member from the three
categories so that each has equal chance of participation in the study.To obtain an
appropriate sample for the respondents, Krejcie& Morgan (1970) sample size
determination table was used to sample the 2700 customers of Premier Realty Limited
according to each of the three stratum. The appropriate sample size for a population of
2700 was 336 respondents. Collection of data was from both primary and secondary
sources.
Primary data was collected using questionnaire. A questionnaire was used for data
collection because it offers considerable advantage in administration. A questionnaire
was justified for use in this study as it enhanced collection of quantitative data.
Furthermore, a questionnaire allowed for collection of data in a cost effective, easy and
without the researchers influence on the findings. It was also used to collect both
ix
quantitative and qualitative data while interview guide was used to collect qualitative data
only. The questionnaires comprised of open and closed ended questions
The researcher did a pilot study to validate the questionnaire by identifying problems with
the research design and give the researcher experience with participants, methodology
and data collection. The pre-test questionnaire was sent to the respondent sample in the
same setting and the same data collection and analysis techniques as was used in the final
study. The participants answered the questionnaires and interviews while the researcher
waited for same day collection. After data was obtained through questionnaires and
interviews, they were edited and the questionnaire pre coded to make it easy for data
entry. Quantitative data was categorized and entered into a computer spread sheet in a
standard format to allow for computation of descriptive statistics. Thereafter the data was
coded and analyzed with the use of a computer in Statistical Package for Social Sciences
(SPSS) version 20 programs to produce frequencies, descriptive and inferential statistics.
In order to ensure that the instruments used are valid and reliable, the researcher exposed
them to validity and reliability tests. The researcher discussed the validity of the
instruments contents with the supervisor to ensure that the instrument questions are
relevant for research questions, so that any ambiguity and inconsistency can be corrected.
The researcher then personally administered the questionnaires and conducted interviews
to the participants. The researcher explained the purpose, clarified points and motivated
the respondents to answer questions carefully. The participants answered the
questionnaires and interviews while the researcher waited for same day collection.In
conclusion, the study revealed that there was high growth in residential construction,
there was high growth in commercial construction and increased availability of properties
in the market.
The study established that consumer confidence plays an important role in determining
the real estate demand. This was revealed in the study that demands for houses depend on
consumer confidence. In particular, it depends on people’s confidence about the future of
the economy and housing market. The study therefore concurs that the process of getting
a property from Premier Realty Limited was convenient and highly rated Premier Realty
Limited compared to other players in the market due to customer confidence. Out of the
many aspects that can influence a customer’s decision-making behavior, one of the major
factors was gender. Men and women approach shopping with different motives,
perspectives, rationales, and considerations. The study established that other socio-
x
demographic aspects like the size of family influenced the decision to invest in a
property, the respondents were willing to purchase land in sub urban areas that are
slightly out of town and they also agreed that age did not deter them from buying my first
property. Socio-demographic factors overall have a significant influence of the
environmental factors that affect the quality of residential housing.
Premier Realty Limited delivers on their promise due to better managerial practices which
including robust communication mechanism. Premier Realty Limited offered
complimentary services like valuation; survey and consultancy that support the end to end
purchase process which is a clear indication of good management practices. The growth
rate of real estate is affected by property prices that are high, customers the study
confirms that the return on investment for the real estate industry is high. The mortgage
interest rates may discourage the growth of the real estate industry; even though there is
increase willingness by banks to lend money to client to purchase property. In
conclusion, the study revealed that there was high growth in residential construction,
there was high growth in commercial construction and increased availability of properties
in the market.
The study recommended that the mortgage interest rates should be drastically lowered in
order to speed the growth of the real estate industry. Make gender an integral part of
property rights and economic development programs, and ensure meaningful involvement
by women in project work planning and implementation from the beginning and
throughout all components. County Government of Nairobi should formulate relevant
environmental policy guidelines for residential areas such as zoning, pollution and
development control laws in view of the fact that households pay more attention to the
neighborhood characteristics and location characteristics influencing the quality of
housing.
1
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
Construction industry plays a major role in developing and achieving the aims and
objectives of a society. Their contribution to national development in developing
economies has received wide attention by governments, investors and practitioners
(Ofori, 2015). The construction sector is considered a crucial sector for strategic
economic significance in developing countries due to the macroeconomic role it plays in
fixed capital formation and linkages across sectors due to their significant achievement of
national goals of infrastructural development, provision of shelter and job creation
(Stasiak-Betlejewska & Potkany, 2015).
The real estate sector is quite diversified in terms of income, geography and types. The
sector caters for all people including high, middle and low income earners. The real
estate property types include retail, office, residential, industrial and special properties
mainly found in urban areas. The real estate industry, much like any other industry, is
continuously evolving. The key drivers for the real estate sector ranges from prospect for
profitability to the changing face of space complimented by the uncertainty surrounding
the sector.
Real estate comprises of land, building on it and other natural resources like minerals and
crops and minerals which are immovable. Real estate investment entails different
activities ranging from management, ownership, purchase, rental land or sale of real
estate for profit (Okumu, 2017).
From a global perspective, the real estate growth in India stands out amongst the most
comprehensively perceived areas. It is slated to develop at 30 percent throughout the
following decade. The development of this area is well supplemented by the development
of the professional workplace and the interest for office space just as urban and semi-
urban housing demands (Kapila, 2014).
Sukulpat (2010) indicates that Risks in real estate development arise from Social,
Technological, economic exchange rates, volatility of returns and levels of inflation
Environmental and Political instability. Tharachai (2013) noted that property developers
require innovations and creativity to improve performance. Innovations enable companies
to have a competitive advantage over other companies. Through innovations, one is able
2
to increase cash flow, save time, decrease cost, improve quality and minimize uncertainty.
The real estate is uniquebecause of different features which are not directly
interchangeable. Due to this, identifying and locating properties to invest involves
numerous works. Depending on knowledge of viable properties, the decision to purchase
individual properties may be highly variable. Information distortion is widely spread in
real estate markets due to many property brokers and agents. Despite transaction costs
and risks involved, it provides opportunities to investors to obtain properties at bargain
prices.
The situation is not different in sub Saharan Africa. In South Africa, Norbert (2014)
estimates a real estate growth to the tune of US$ 180 billion by 2020. This alone
contributes 5-6 percent of the nation's (GDP). Likewise, in this period, the market size of
this segment is relied upon to increase at a compound yearly development rate of 11.2
percent. Retail, hospitality and commercial real estate are also growing significantly,
providing the much-needed infrastructure for South Africa’s growing needs.Despite these
immense returns in term of wealth accumulation, the real estate industry has consistently
failed to realize the major role of bridging the housing gap due to different reasons.Some
of this factors include different competing factors such as: rural to urban migration, the
urge to own homes, the increased remittances from diaspora, increased foreign
investments, increased infrastructure developments among others (Tharachai, 2013).
These reasons have led to property prices in the urban areas especially in major cities
such as Honkong, South Africa and Nairobi, have witnessed an upward trend.
In Seychelles foreign investors have bought real estate valued property space worth over
US$ 2 billion. Responding to an increasingly well-informed consumer and keeping in
mind the globalization of the business outlook, real estate developers have also shifted
gears and accepted fresh challenges especially that of land scarcity. Real estate
developers are struggling to meet the growing demand for housing and the need for
managing multiple projects across cities in the country (Raman, 2013)
In Kenya which is East Africa’s biggest economy is growing at a rate of 2.7 per cent
annually (Otieno, 2015. The real estate market is increasingly dominated by institutional
investors with the property market recording significant growth of up to 25 per cent,
including increases in commercial and residential real estate. The continued rise in
demand for housing in Nairobi County has not gone unnoticed (Otieno, 2015). Increasing
numbers of young households, rapid urbanization, growing middle class and rapid
3
increase in population, migration of people from the rural areas and industrialization has
forced the government and realtors to rethink on ways to fulfil the demand for real estate
properties (Kenya National Housing Survey, 2014). The report continues to say that
investors, both foreign and local are eager to tap into this robust growth. To unlock this
sector's potential, realtors and government planners are positioning themselves
strategically too.According to Mark (2013) Property development is extremely risky, with
many risks witnessed throughout the property development process however, it still
remains a lucrative market.
For the past two decades, the Kenyan real estate market has grown exponentially as
evidenced by its contribution to the country’s GDP which grew from 10.5% in 2000 to
12.6% in 2012 and 13.8% in 2016.Real estate investment plays crucial role in providing
employment opportunities, offering shelter to households, enhancing income distribution
and alleviating poverty. However, the real estate industry in Kenya continues to fail to
fulfil this fundamental role due to a number of unique factors that affect investment in the
sector.Real Estate investment comprises of diversified amount of wealth which can be
attested to by huge number of real estate investors and agents. One of the key factors that
influence the growth of real estate is the general strength of the economy. This is
commonly estimated by financial pointers that are customer, economic and managerial
related for example, the GDP, business information, manufacturing activities, interest
rates, Government policies and so forth. Extensively, when the economy is slow, so is
real estate (Otieno, 2015). The key drivers for the real estate sector ranges from prospect
for profitability to the changing face of space complimented by the uncertainty
surrounding the sector.
Some of the piece of evidence of investor confidence in the Kenyan real estate
commercial property is Old Mutual Property’s recent investment in the Two Rivers Mall.
The country real estate sector has also witnessed investments from the Delta Africa
Property Fund, Retail Africa and Abland – all from South Africa. AVIC
InternationalHolding Corporation of China is also expected to invest over US$ 200M in
constructing their Africa Headquarters in Nairobi. The multi-user development has been
reported to contain the highest office block in East Africa and will undoubtedly reshape
Nairobi’s skyline. All these investments are attributed to the vibrant and ever growing
real estate sector in Kenya especially in Nairobi County. The growth of Nairobi country
then has led to the opening up of other towns that neighbour it. These are towns like
4
Kiambu, Thika, Ruiru, Machakos, Kitengela and Limuru. In addition devolution and
decentralization of funding had also led to the growth of many other rural towns due to
availability of resources as well as empowerment of the people. It is against the backdrop
of these immense growthsthat this research has been undertaken to ascertain the factors
affecting the growth or real estate companies in Kenya.
In Kenya, real estate attractiveness has been witnessed because many investors have
diversified their savings. That is from the low-yield treasury bills to the huge profitable
property market. Banks have boosted this attractiveness through introducing and actively
marketing different mortgage products especially to property companies. David and Zhu
(2014) observed that in lending for the purchase of land for development and existing
buildings; banks finance construction projects; lend to non-bank and finance companies
that may finance real estate; banks also lend to non-financial firms based on real estate
collateral. According to Ripin (2015) Nairobi as a city has many
commercialdevelopments with internationally acceptable design and construction
standards. Roger (2015) noted that behind this impressive designs and architecture, also
lies an enormous industry that has a vast potential to improve across all its constituent
components: design, engineering, construction, day-to-day usage and maintenance.
Ruitha (2011) notes slow delivery technologies for housing as a factor affecting real
estate investment.
Premier Realty Limited (PRL) which is one of the leading real estate agents in Kenya was
established in 2001 with the aim of changing the way real estate agents conduct their
business in Kenya. The continuous excellence of the organisation in customer service and
experience are and continue to be the key pillars that the organisation focuses on.In the
past, clients interested in real estate often received inefficient and unreliable information.
They did not take time to research and advertise hence the organisations gave clients
adequate information to help make informed decisions about investing in the Real
Estate.Today, the organisation prides itself in having a wide range of products well-
tailored to meet the dynamic needs of its clients., the organisation offers Estate agency,
Letting & Management of both residential and commercial properties, buying & selling
of Land, Property Development & Project Management on to value added services like
valuation, survey as well as consultancy (Premier Reality Source Book, 2017).
5
1.2 Statement of the Problem
The real estate investment has been on the growth path for over a decade now. The
industry has seen massive investment and there are concerns that the trend may slow
down (Salmin, 2018). The change is partly attributed to the variability of inflation rate.
Although variability of interest rates is a prominent feature of the economy, interest rates
change in response to a variety of economic events, such as changes in government
policy, crises in domestic and international financial markets, and changes in the
prospects for long-term economic growth and inflation. There is a more regular
variability of interest rates associated with the business cycle, the expansions and
contractions that the economy experiences over time (Mohan& Lewin, 2017). Lieser and
Groh(2014) examined the determinants of commercial real estate investments using a set
of panel data series for 47 countries from 2007 to 2009. The study explored how different
environmental factors affect commercial real estate investment activity through. Their
results showed that rapid urbanization, economic growth, and compelling demographics
attract real estate investments. From the above studies little attention was paid on the
extent to which managerial factors influenced the growth of real estate.
A study conducted by Huang and Ma (2015) on the influence of real estate investment
and economic growth in China established that the effect of real estate investment on
economic growth exceeded that of economic growth on real estate investment. More
importantly, the study pointed out that buy in behaviour of customers played an integral
role in fostering increase in real estate investment. Locally, a study was undertaken by
Julius (2015) on the determinants of Residential Real Estate Prices in Nairobi. The
researcher found out that customer buy in behaviour affected house prices. Kenyan real
estate sector has been flourishing between the years 2000 to 2010. Both studies did not
establish the extent to which customer focus and other socio-demographic factors
influence the growth of real estate, the current study to filled this gap
Juma (2014) carried out a study which was geared at determining the effect of customer
relationship management on real estate investment growth in Kenya. The research
findings established that a strong positive relationship existed between customer
management and real estate growth (Nzalu, 2012). The population in this study comprised
of both public and private real estate investors. The findings pointed out customer
relationship management as the leading contributor to real estate growth. Inflation was
the second contributor followed by interest rates then lastly population. Jumbale, (2015)
6
also carried out a study to ascertain the relationship between house prices and real estate
financing in Kenya. The objective of the study being: to examine the relationship between
and real estate financing and house prices in Kenya. It was concluded that the changes in
housing prices and long-term evolution of real estate financing are positively and
significantly related
Studies undertaken both globally and locally show different aspects of real estate in
relation to growth and investment. No comprehensive research has been done to ascertain
the factors affecting the growth of real estate investment companies in Kenya. Therefore,
in relation to this gap, this study specifically focused on the factors affecting the growth
of real estate investment companies in Kenya.
1.3 General Objective
The general objective of this study was to examine the factors affecting the growth of real
estate investment companies in Kenya a case of Premier Realty Limited.
1.4 Specific Objectives
1.4.1To establish customer related factors on growth of Real Estate at Premier Realty
Limited
1.4.2 To determine the socio-demographic factors affecting the growth of real estate
companies focusing on Premier Realty Limited in Kenya
1.4.3 To examine the managerial factors/ practices that influences the growth of real
estate at Premier Realty Limited.
1.5 Significance of the Study
1.5.1 Realtors Management
This research study may be of great benefit to Premier Realty Limited and other realtors.
The findings of this study may provide information on the influences of demand and
supply of real estate property and provide information of how those factors can enhance
real estate market growth. The findings of this study may also be used by the realtors and
agents to ensure that it analyses factors affecting the growth real estate investment
companies.
7
1.5.2 Academicians
The finding may be also of important to researchers and academicians to form a basis for
further researches. Research organizations and scholars may be provided with
background information if they will want to carry out further research in this area and
related areas. The study may also facilitate individual researchers to identify gaps in the
current research and carry out research in those areas.
1.5.3 Government
This research finding can benefit the national government as the study may provide
information on the rate of growth of real estate industry and its effects on the housing
needs of the citizens and this can be used in the formulation of policies related to demand
and supply of real estate property. The study may help the government in addressing the
perennial housing problem in different parts of the country under the big four agenda
programme which includes affordable housing scheme.
1.6 Scope of the Study
The study was conducted in Premier Realty Limited located in Westlands. The
population for this study was all the customers of Premier Realty Limited. The data was
obtained from the Marketing Department. The aim was to draw respondents from the
customer base of the organization.
The geographic segmentation was according to regions within Nairobi, that is, East, West,
South, North and the Central Business District (CBD). However this study was conducted
in Premier Realty Limited located in Westlands. The main reason for choosing this type
of geographical segmentation was to explore the land buying behaviour of different
consumers according to their location and thus socio-demographic status.
In terms of population, the study focused only on customers who purchase land,
customers on whose behalf the company manage their rentals and the customers in the
form of agencies that is clients who want to sell their property.
The study was conducted during the month of July 2018. One of the key limitations of the
study was the unwillingness of the respondents to provide the required information. The
study researcher assured the participants of confidentiality and anonymity to mitigate
against non-willingness to participate.
8
1.7 Definition of Terms
1.7. 1 Real Estate Investment:
Real estate is the property, land, buildings, air rights above the land and underground
rights below the land. The term real estate means real, or physical, property. “Real”
comes from the Latin root res, or things. Others say it’s from the Latin word rex, meaning
“royal,” since kings used to own all land in their kingdoms (Nzalu, 2012).
1.7.2 Customer Factor
Behavioral perspectives,insights on consumer purchase behavior and explanation drives
consumers to purchasehousing like attitude, location living space and presence of public
service (Kokli& Vida, 2009).
1.7.3 Socio-demographic Factors
These are factors that influence an investor in real estate particularly on societal,
demography. These includes age, gender, location of the property and size of the
household including income which affect the growth of real estate (Nithyamanohari &
Ambika, 2014)
1.7.4 Managerial Factors.
This is the sum total of leadership and management issues including communication that
may influence the growth of real 0estates (David & Zhu, 2014).
1.8 Chapter Summary
This chapter presents the background of the study and outlines the statement of the
problem looking at the factors effecting the growth of real estate companies in Kenya a
case of Premier Realty Limited. The problem of the study is also elaborated, and the
research highlighted. The section also outlines the significance of the study, scope of the
study and definition of the major terms that were used in the research. Chapter two
tackles literature review for this research based on the research objectives for this
study.Chapter three addresses the methodology through which the research will be carried
out and it includes the research design, sampling design and techniques utilized and also
the data collection methods, analysis and presentation that the researcher will use in
carrying-out the study.
9
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Introduction
This chapter reviews literature based on various aspects of factors affecting the growth of
real estate investment companies. The purpose of literature review is to outline what has
been done previously as far as the research problem being studied is concerned. The
literature reviewed in this study is explored under three themes that is studied. This
research draws materials from several sources which are related to the objectives of this
specific study. The chapter finally presents the chapter summary.
2.2 Customer Related Factorson the Growth of Real Estate Companies
One of the main aims of each company’s development is to promote cooperation with its
clients.Customer satisfaction is progressively observed as a conclusive factor in
guaranteeing an organization's financial achievement.From Behavioral
perspectives,experiences on purchaser buy conduct and clarification were given on what
drives buyers to buy housing (Kokli& Vida, 2009). Therefore, customer behavioral
research is one f the main method used to understand the driving forces of homebuyers.
However, there is an impressive contention on the consolidation of data about customer
mentalities, inclinations, and discernment into monetary models of housing and this
interest is basic to any decrease of the enormous edge of unexplained difference in
housing utilization conduct (DeLisle, 2012). The success of Real Estate marketing
depends on properly analyzing the buying behavior of Real Estate customers. To think
about the requirements of clients it is unavoidable to comprehend the elements and
factors that stalwartly impact the clients to purchase an apartment.
2.2.1 Customer Attitude
Attitude can be regarded as the person’s favor or disfavor toward an action including
purchase or renting of a house Al-Nahdiand Abu (2014),it can likewise be psychological
inclination that is communicated by assessing a specific element with some level of
support or not (Al-Nahdi, 2015). The way individuals respond to and are disposed
towards, an objectcan also be used to mean attitude (Yusliza & Ramayah, 2011).
Therefore, an individual who had faith in the results because of taking part in a
constructive conduct will have and positive attitude of mind toward playing out that
conduct, while an individual who had confidence in the results because of taking part in a
10
negative conduct will have a negative mentality toward playing out that conduct (Al-
Nahdi & Abu, 2014). Attitude is one of the determinants that influence person's conduct
and it impacts shopper aim to purchase durables (Gibler& Nelson, 2003). Studies
demonstrated that the attitude of the buyer impacts the acquiring procedure of a specially
designed pre-assembled house, in housing and furthermore that it has an orientation on
customer aim to buy green in Toronto, Canada (Koklic & Vida, 2009; Numraktrakulet,
al., 2012).
2.2.2 Increasing affordability of Customers
Willingness to acquire a property depends mainly on the income of the buyer. In India,
affordability of consumers has risen exponentially since the shift from socialism to
capitalist economy (Magazine, 2017). This is due to entry of foreign companies which
have created more jobs. The affordability has continuously been on an upward trend,
creating more demand for housing and commercial property, particularly in cities. In rural
areas, however, the demand has not seen the same trend as affordability here has not
changed much over the past two decades.
Abelson and Chung (2005) found that price and affordability of houses is one of the
factors that affect Australian real estate purchaser’s decisions. In addition, a survey
conducted by Opoku and Abdul-Muhmin (2010) sought to examine the housing
preferences of low-income consumers in Saudi Arabia, with specific emphasis on their
preferences for alternative dwelling types and tenure options, factors influencing their
housing decisions, and how these vary across socio-demographic sub-segments of this
population segment. Using data collected through a structured self-administered survey in
the major urban areas of the country, the study found that majority of respondents prefer
the small house to duplex or apartment, and despite their limited incomes the majority
prefer buying over renting; the study also found that living space to be one of the most
important factors Saudi real estate purchasers used to consider when purchasing real
estate. There was a strong relationship between tenure preferences and dwelling type,
with respondents who prefer the small house or duplex overwhelmingly opting for the
buying option, whilst respondents who choose apartments prefer the rental option. On
importance of housing attributes, a factor analysis of 35 housing attributes included in the
study produced 10 factors, of which financial considerations, private living space, and
aesthetic aspects of the house rank as the top 3 important factors in the low-income
consumers' housing decisions.
11
According to Abu Bakar (2014) population growth and ageing will lead to several real
estate subsectors emerging. While office, industrial, retail and residential will remain the
main sectors, affordable housing, agriculture, healthcare and retirement will become
significant subsectors in their own right. So, shifting demographic trends are likely to
create a huge need for new and different real estate by 2020 and beyond. Residential real
estate will become more specialised, with local and cultural differences influencing
exactly how this evolves. For instance, city apartments for young professionals may be
smaller, without kitchens or car parks; there’s likely to be a range of retirement
accommodation for the elderly; and families in some emerging economies might well live
in gated communities outside the city centres
2.2.3 Availability of property and property prices
Valuation of a property increases with a drop in the availability of properties in a
particular area and vice versa (Money Control, 2017). For instance, Central Chennai is
one of the most valued parts of the city due to its prime location. There is lack of
properties available for sale in this location, and thus, demand is high in spite of its steep
prices. Alternatively, when number of units for sale at a location is high and price is high,
the demand is low. Given its high population, India is currently suffering from shortage of
housing (Ameer & Suchitra, 2016).
Carnoske et al (2010) sought to establish factors that influence real estate development,
sale, and perceived demand for activity-friendly communities. A sample of realtors from
the National Association of Realtors (n = 4950) and developers from the National
Association of Home Builders (n = 162) were surveyed in early 2009 to assess factors
influencing homebuyers’ decisions; incentives and barriers to developing TNDs; effects
of depressed housing market conditions and financing on sales; trends in buying; and
energy considerations (eg, green building).The findings revealed that Realtors real estate
believed that homebuyers continue to rank prices, safety and school quality higher than
TND amenities.
2.2.4 Customer’s confidence
Consumer confidence plays an important role in determining the real estate demand.
When a consumer shows willingness in taking a risk by investing in a property, it shows
their confidence in the investment (Han & Kim, 2010). Both investor and business
confidence can impact real estate prices, especially in a property market like Dubai where
12
foreign investment has always dominated the sector. Customer confidence is important to
keep the market going upwards. Business confidence results in more job creation and
hiring that spikes the demand for residential units.Demand for houses depends on
consumer confidence. In particular, it depends on people’s confidence about the future of
the economy and housing market. If people expect prices to rise, demand will rise so
people can gain from rising wealth. In a boom, demand for houses rises faster than
incomes as seen in the graph above.
Owusu, Badu and Mensa (2015) investigated into factors that real estate customers
consider in selecting their estate agents in Kumasi Metropolis, Ghana for the purpose
of creating better customer satisfaction in real estate agency market. The data
collection instrument adopted for this study was self-administered questionnaires. The
study sample consisted of two hundred and three (203) real estate consumers in
Kumasi metropolis. A survey of 203 real estate consumers revealed the factors
influencing the selection of real estate agents in the study area. The study found out
that real estate consumers are mostly concern about agent’s reputation when deciding
on the choice of whom to handle their probably single largest investment which builds
customer confidence on the houses. The study also found that 75 representing 37% of
the study population employs the services of real estate agents in order to maximize
returns on their investment.
2.3 Effect of Socio-demographic Factorson the Growth of Real Estate
These are factors that influence an investor in real estate particularly on societal,
demography. These include age, gender, location of the property and size of the
household including income which affect the growth of real estate (Nithyamanohari &
Ambika, 2014).
2.3.1 Demographic Shift of Customers
Demographics are factors that describe the composition of a population such as their
income, migration, population growth and gender. This is one of the big factors having a
direct influence on the real estate market. Population growth combined with improved
economic performance can lead to an increased demand, which leads to a boom in the
real estate market. Demographic shifts will affect demand for real estate fundamentally.
The burgeoning middle-class urban populations in Asia, Africa and South America will
need far more housing. Meanwhile, the advanced economies’ ageing populations will
13
demand specialist types of real estate, while their requirements for family homes will
moderate (Shanu, 2015).Cities will attract the young middle classes, especially in
emerging markets. As intense competition for space increases urban density, apartments
are likely to shrink. Developers will need to become more innovative about how they use
space. The advanced economies’ ageing population will limit house price rises. The Bank
for International Settlements’ analysis of advanced economies estimates that the US will
suffer pricing deflation averaging about 80 basis points per annum in real prices over the
next 40 years, with the impact greater still in continental Europe and Japan.
Ombongi (2014) sought to establishdemographics, housing search, asymmetric
information and housing decisions amongst apartment households in Nairobi County. The
study sought to determine the mediating effect of housing search on the influence of
demographics on housing decisions amongst households. Descriptive cross-sectional
design (also called sample survey) was adopted for the study. The target population of the
study was all apartment households in Nairobi County who bought their apartments two
years preceding the data collection exercise. The respondent for the study was the owner
of the apartment house who was taken to be the representative of the household. Using
cluster sampling, a sample of 226 households was contacted-199 responded. The study
adopted the positivist research philosophy and a descriptive cross-sectional design. SPSS
was used to analyze data using factor analysis, cross tabulation, multiple regression
analysis (standard) and hierarchical regression analysis. The research instrument was
delivered using the „drop-and-pick-later‟ technique. The researcher engaged a research
assistant to assist in the data collection upon being adequately trained for the exercise.
Study found that demographics overall had a significant influence on choice of
neighbourhood and choice of location of house; marital status was the sole factor with a
significant influence on source of financing; housing search and asymmetric information
had a mediating and moderating influence but their influence was not statistically
significant; the joint influence of demographics, housing search and asymmetric
information on the 4 housing decisions was greater than the influence of demographics
(singly) on all the 4 housing decisions.
14
2.3.2 Gender Difference in Property Investment
In Mauritius, Bibi-Maryam and Vikneswaran (2016) carried a research to find differences
in working women and men in their decision to make an investment in properties in
Mauritius, with an objective to find whether gender differences exist in investment
decision making. The literature review elaborated on the three variables which contribute
to investment decision making have been chosen, namely, risk tolerance, financial
literacy and types of investment in properties. The methodology consisted of the planning
process in which the research collected data through questionnaires among the working
class of Mauritians in the capital city Port Louis, to analyze those data and finally to test
the data. The independent samples t-test was chosen as the test of difference to prove the
hypotheses of the research. The results obtained revealed that there is a significant
difference between gender and risk tolerance while there was no significant difference
between gender and financial literacy and also types of property investment. The findings
of the research were helpful in finding out possible causes which generated such results.
Chun (2018) examined whether a person’s gender influences his or her real estate trading
sentiments. Previous studies have suggested that risk aversion, loss aversion, and
expectations of probabilities can affect trading sentiments. Thus, this study inferred that a
person’s gender can inform these three factors and thus lead to differences in real estate
trading preferences between genders. More noticeable expectation adjustment behavior
was observed in men than in women. However, no significant expectation errors were
observed in both genders. Moreover, this study observed that gender differences in risk
aversion were affected by the fear index, whereas gender differences in loss aversion
were affected by unemployment rates. Stock market rallies affected only men’s
perceptions toward real estate value. Overall, a more noticeable optimism was observed
in men, who were significantly influenced by house price changes.
2.3.3 Age and Property Investment
In Kenya, most empirical investigations have dwelt on demographic characteristics,
housing regulations and environmental factors influencing household mobility. Beguy et
al. (2010) used longitudinal data in measuring migration flows (household mobility) and
demographic trends as a key determinant of mobility in Korogocho and Viwandani
settlements of Nairobi between years 2003 to 2007. The study found that gender and age
had a strong influence on mobility; the presence of basic amenities like electricity
15
reduced chances of migration; mobility/migration was high among early adults especially
between ages 20 to 24; gender was a factor explaining mobility since women were more
mobile than men. Beguyet al. (2010) further indicate that educational attainment, marital
status, characteristics of a house and ethnic groupings are key factors explaining mobility
amongst low income households. The study attributed housing formation to ethnic
affiliation (tribe) by finding that about 64% of the residents who owned houses in Nairobi
were from the kikuyu community. The study further found that those who were in marital
unions were less likely to migrate, mobility within Korogocho and Viwandani settlements
was highly attributed to notice of demolition, educational levels, insecurity concerns and
marital status.
2.3.4 Size of family/Incomes and Property Investment
Makachia (2010) investigated transformation of housing in formal housing in the rental
housing and owner-occupied housing in Kaloleni and Buruburu Estates of Nairobi,
Kenya. He found that economic and social factors explained transformation of residential
housing in the two estates. The study concentrated on dweller initiated transformations
associated with strategies adopted in the design of housing and inherent failures and
successes. Insecurity, physical space, amenities, transportation system, size, type and
location of house, economic factors, age of household head, size of household, income,
occupation and tribal affiliation were key social and economic factors affecting housing
transformation within the two estates (Makachia, 2010). Imwati (2010) used cluster
sampling in studying planning and the role of demographics in the peri-urban settlement
of Mlolongo Township, Nairobi and found that indeed, demographics did influence
settlements in Mlolongo. The study focused on the slums and shanties especially the low
incomes, unemployed and those living in poor conditions and found that the informal
settlements varied in demographics, size, social and ethnic composition with income
being the key determinant of housing decisions amongst most households.
2.3.5 Location, Amenities and Property Investment
Oundo (2011) investigated the commercial urban forms in Nairobi with special interest on
the impact of location decisions on performance of commercial real estate markets. He
found that choice of commercial location decisions were influenced by service charges,
easy access to clients/customers, transportation system, rent and other economic factors.
Nairobi contributes more than half of Kenya’s GDP and the city has a dispersed urban
16
form. Most commercial centres in Nairobi are located closer to residential neighborhoods
(especially Upper hill and Westlands) and hence, accessibility, location and neighborhood
characteristics were key consideration for commercial housing decisions. The study found
that decisions on location of commercial housing in Nairobi were highly explained by
increase in population, easy access to customers, transportation system, supply of utilities,
sewerage system, street lighting, quality of building, space for business expansion, rent
and service charges (occupational costs), economic growth, the physical state of the inner
city and a firm’s individual location decision. The inner city of Nairobi suffers from poor
environmental conditions, high rate of crime, inadequate schools, poor housing, traffic
congestion amongst others. Clustering of commercial urban units was actually explained
by time factor and cost of travel (Oundo, 2011).
The review of local and foreign empirical literature presents several knowledge gaps.
Firstly, the studies conceptualize demographic characteristics as factors influencing the
likelihood of home ownership but very few studies conceptualize demographics and
predictors of real estate investment decisions. In addition, the cited empirical evidence
present contradictions on which demographics precisely explain home ownership and real
estate investment decisions: the studies also fail to explain whether demographics have a
significant influence on housing decision choices. Secondly, most of the reviewed studies
on housing market information tend to focus more on search for market information and
tests of information efficiency of housing markets as opposed to asymmetric information
and how the latter influences housing decisions.
2.4 Effect of the Managerial Practices on the Growth of Real Estate Companies.
Demand for housing in Kenya is increasing and so is home ownership. The prevailing
demand and supply conditions however point to the fast that the growth in home
ownership is constrained by the preferences in both modality of acquisition, funding
options and risks associated to housing development (Centre for Research on Financial
Markets & Policy, 2015).Real estate management escapes the thoughtful attention of
most senior managers. It often falls within the realm of their responsibilities and of
course, they use it in their daily operation but many managers do not appreciate its
potential impact on company performance. So they delegate real estate to specialists, who
operate on a deal-by-deal basis and consider their decisions as administrative and
technical tasks. However, some companies have recognized that by managing real estate
17
as a business function, they can cut costs significantly and, at the same time, increase
productivity.
2.4.1 Risk Management and Growth of Real Estate
Emilia (2009) notes that credit risk which is a type of risk faced by financial
intermediaries. He noted that the providers of housing loans encounter three types of risks
namely, production, management and income risks. Since this risk carries the potential of
wiping out enough of a financiers capital to force it into bankruptcy, managing this kind
of risk has always been one of the predominant challenges in running a financial
intermediaries Broll, et al, (2002). Banks play a crucial role in the financing of real estate
through mortgage financing. In lending for the purchase of land for development and
existing buildings; banks finance construction projects; lend to non-bank and finance
companies that may finance real estate; banks also lend to non-financial firms based on
real estate collateral (David & Zhu, 2004).
2.4.2 Management/ Leadership Style and Real Estate Growth
Leadership can prove to be an extremely vital tool when trying to motivate others,
especially when creativity is lacking. In developed countries, the grave consequences of
the neglect of CRE have been documented. Sharp (2013) challenged the practice of
inactive management of Real Estate management. Real estate managers have historically
struggled to provide managerial service in an environment in which cost management was
a main focus. Little attention was given to the assets of the company, which take huge
capital to procure and the decision to procure them is always taken at the topmost level of
the organisation, often at the board level and also as a strategic decision. It is thus of
concern that not much attention is paid to Real Estate management practices: suggesting
that Real Estate management has been neglected in corporate management (Ilsjan,
2007).Real estate business management and leadership go hand-in-hand. The ability to
innovate new ideas is equally as important as the ability to manage them. The enigma,
however, is that not every manager qualifies as a great leader. An effective leader not
only produces the vision for their business the recipe for success, if you will but the
actions needed to accomplish it. Rather than control people, true leadership aims to guide,
energize and excite those around them.
Existing literature has, however, brought to the limelight that Real Estates (RE) is being
undermanaged. For instance, RICS (2002) reported that UK business throws away £18
18
billion a year through inefficient use of RE, which could have improved gross trading
profits by up to 13% and contributed to economic development. HWA (2003) found great
loss of the value contribution of RE due to the fact that many companies have little ideas
of their RE costs and the extent to which their assets could be used to increase
productivity and contribute to economic growth. This is in spite of the fact that no
corporate body or organisation can function without RE since it is RE that provides space
for its operations.
2.4.3 Management Attitude and its influence on the growth of RE
Attitude is the person’s favor or disfavour toward an action (Al-Nahdi et al., 2009). While
attitude, according to Yusliza and Ramayah (2011) attitude is defined as the way
individuals respond to and are disposed towards, an object.AL-Nahdi et al (2015) sought
to establish factors affecting the real estate market in Saudi Arabia. The study
investigated the factors influencing Saudi Arabians (Saudis) to purchase real estate. The
study examined the effect of attitude, subjective norm, perceived behaviour control, and
finance on the intention to purchase real estate. A total of 450 questionnaires were
distributed to respondents in Jeddah. Based on 322 questionnaires collected, the results
showed that there is a positively significant relationship between attitude, subjective norm
and finance toward the intention to purchase real estate, while perceived behaviour
control had no effect on the customers' intention to purchase real estate.
On the other hand, Kamal et al (2016) carried an investigation of market factors that
affect customers’ buying attitude towards apartment buying in Bangladesh. The study
investigated market factors that have been changing the attitude of Real Estate buyers in
Bangladesh and ultimately creating the opportunities for Real Estate developers and
marketers. The study also examined relationships among the market factors and buying
attitude, customers’ buying attitude on buying intention. Total twenty-four (24) attributes
was taken into consideration in designing questionnaire for the study. A questionnaire
survey method was used with 200 respondents and response rate of 76.5 percent. Initially
an exploratory factor analysis had been directed using SPSS (version 21). The study
explored four market factors where cultural changes, land problem, urbanization and
population pressures and finally raising prices level of building materials acted as
antecedents of customers’ buying attitude and created opportunities for the industry.It was
found that land problem, urbanization and population pressures have created
opportunities for Real Estate industry that have significant impact on customers’ buying
19
attitude except the cultural changes and raising price level. It was also found that buying
intention is strongly influenced by buying attitude of the customers.This current study
will however establish the influence of attitude of management towards the growth of real
estates in Kenya.
2.4.4 Communications and its Influence the Growth of RE
Communication informs and persuades, motivates and encourages and even comforts.
Communication also spawns productivity and business growth. Research consistently
shows a link between happy, positive employees and high morale and productivity. A
good communication plan can increase the success and the potential earnings of a real
estate company. The process of creating the plan will help the company to focus on
critical factors including what sets the business apart from other real estate firms (Herrick
& Gardiner, 2014).Real estate is a people business and the way one communicates has a
big impact on success of professionals. Real estate professionals’ help people buy and sell
their homes, and attitude and communication skills can make that a good experience or a
forgettable one for everyone. Research by Shirina (2017) reveals that 97% of employees
surveyed believe that poor communication as a result of inadequate business language
skills can create misunderstanding. A staggering 83% of employees report that poor
business language skills have resulted in a negative impact on sales, profitability and
efficiency of operations in their organisations. Communication is at the centre of real
estate in that a vendor wants to hear feedback and results, but maybe not every time you
receive an enquiry (Shirina, 2017). Buyers and investors are interested in new property
listings, so note their criteria and alert them using their preferred medium when a suitable
property comes up, they’ll appreciate your attention to detail (Herrick & Gardiner, 2014).
2.4.5 Public Relation Management and the Growth of RE companies
Onamade and Adejugbe, (2014) opines that a good public relations practice today is an
important tool in Real Estate marketing which is often ignored in the hurry to search for
business. A real estate PR programme can give Real Estate organizations much more
exposure than the traditional advertising in media, and at much less a cost in today1s high
cost media marketplace. Public Relations can strengthen the Real Estate marketing and
promotion programme with credibility and a targeted exposure and often for a fraction of
the cost Real estate PR takes time and effort, but it works, and the lasting results are well
worth the effort. The value of a PR programme depends on the professionalism and
20
thoroughness of the analysis and thinking that precedes the execution! Providing this
backup requires a high calibre of understanding of the organization, the situation and the
marketplace factors or reality. This therefore seeks to establish examine the extent to
which public relation management influence the growth of real estate companies influence the
growth of real estate in Kenya, particularly Premier Realty Limited.
2.5 Chapter Summary
From the reviewed empirical literature it is evident that there is no empirical study of key
effects of economic factors on performance of real estate market in Kenya. The current
study sought to determine the key socio-demographic factors that affect real estate market
in Kenya and premier reality limited in particular. This may contribute to other studies by
ascertaining if the selected variables including gender, location, age and other socio-
demographics in Kenya. The literature also reviews about effects of customer related
factors on growth of real estate. Literature also focuses on effects of managerial practices
on the growth of real estate which is actually a relatively new research area with huge
potentials. Researchers on the real estate market, which has drawn little attention hitherto,
are limited in studying real estate performance. Chapter three follows with an elaboration
of the research techniques that was applied including research design and methodology.
21
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Introduction
This chapter discusses the research methodology used to achieve the objectives of the
study. It described the research design, population and sampling design, data collection
methods, research procedures and data analysis of the study.
3.2 Research Design
A research design is the overall plan and strategy that informs the key decisions that are
adopted in research (Bryman &Bell, 2015). The study used a descriptive survey design
Descriptive survey design involves obtaining pertinent and precise information
concerning the current status of phenomena and wherever possible draw valid general
conclusions from the facts discovered. It also involves posing a series of questions to
willing participants and summarizing their responses with statistical indexes and then
drawing inferences about a particular population from the responses of the sample
(Creswell, 2009). Descriptive survey was justified and appropriate as it allows the
researcher to describe, explain and examine facts, trends and patterns that will emerge
from the study (Saunders et al., 2016). A descriptive study is undertaken in order to
ascertain and be able to describe the characteristics of the variables of interest in a
situation (Sekaran & Bougie, 2013). The design enabled the researcher to determine how
the independent variables (Customer related factors, Economic and Managerial factors)
will affect the dependent variable (Growth of real Estate).
On the other hand, a survey strategy, which is usually associated with the deductive
approach was also used since it is the most frequently used to answer who, what, where,
how much and how many questions. Surveys often allow for the collection of a large
amount of data from a sizeable population in a highly economical way. Often obtained by
using a questionnaire administered to a sample, these data are standardized, allowing easy
comparison.
3.3 Population and Sampling Design
3.3.1 Population
Population is defined as the entire group of individuals’ events or objects having common
observable characteristics (Best & Khan, 2011). Population also refers to all the members
22
of a group to which research findings can be generalized and provide an accurate record
of the sampling framework from which the sample is to be drawn (Saunders, Lewis &
Thornhill, 2016). In this study, the target population was customers who purchase land,
customers on whose behalf the company manage their rentals and the customers in the
form of agencies that is clients who want to sell their property. The target population was
a customer base of 2700 respondents. The population was stratified into three categories
with different characteristics i) Customers who purchase land –this is where the company
buy large parcels of land sub divide and sell to our clients and has a population of 2140
respondents ii) Rentals and Management- these are customers on whose behalf the
company manage their rentals and has population of 472 respondents. Finally iii) Agency
-customers in the form of agencies: this is where the company has clients who want to sell
their property thus they bring the same to sell on their behalf and for a commission, their
population is 88 respondents. Table 3.1 shows the population strata and matrix.
Table 3.1: Population Distribution
Population Strata Population size Percentage
Customers who purchase land 2140 79.3
Customers on whose behalf the company
manage their rentals
472 17.4
Customers in the form of agencies 88 3.3
Total 2700 100
3.3.2 Sampling Design
A sample is a representative group of the entire population. Sampling is the process of
selecting a sufficient number of elements from the population, so that a study of the
sample and an understanding of its properties or characteristics would make it possible
for us to generalize such properties or characteristics to the population elements (Sekaran
& Bougie, 2013). The design therefore maps out the procedure to be followed to draw the
study’s sample.
3.3.2.1 Sampling Frame
Sampling frame is defined as the name of all items of an element from which the sample
is essentially drawn and is closely connected to the population (Kothari & Garg, 2014). A
sampling frame is a master list used to define a researcher's population of interest. It gives
23
a complete list of all the members of the population to be studied (Saunders et al., 2016).
It guides the process of grouping units to the frame, to establish the sample size and
allocate the sample to the categories in the sampling frame and final section of the sample
(Mugenda, 2012). The list could be of institutions, individuals, geographical areas, or
other units (Brown & Churchill, 2014). The sampling frame for this study was customers
who purchase land, customers on whose behalf the company manage their rentals and
customers in the form of agencies that customers on whose behalf the company sell
properties for a commission. The sampling frame of this study came from Premier Realty
Limited customer and transaction records.
3.3.2.2 Sampling Technique
According to Cooper and Schindler (2014) a sampling technique is the method of
selecting elements from the population that represent the population. It is a process of
selecting a number of individuals or objects from a population such that the selected
group contains elements of the characteristics found in the entire group (Mugenda, 2012).
In the study, stratified and simple random sampling was used to select the respondents
from the three categories of customers. This type (Stratified) of sampling is used when
the researcher wants to highlight specific subgroups within the population (Vogt, Gardner
& Haeffele, 2012). Stratified sampling is also a technique that recognizes the variations or
sub-groups in the population. When sub-populations vary considerably, it is advantageous
to sample each subpopulation (stratum) independently. Then other sampling technique
can be applied within each stratum. The study first of all stratified the customers
according their categories of either customers who purchase land, customers on whose
behalf the company manage their rentals and the customers in the form of agencies that is
a clients who want to sell their property; then randomly sampled each member from the
three categories so that each had equal chance of participation in the study.
3.3.2.3 Sample Size
A sample size is a representative group drawn from the entire population and a researcher
makes inferences on the whole population by use of the sample (Saunders et al., 2016). A
sample size also refers to the number of items to be selected from the universe to
constitute a sample. The sample size is an important feature of any empirical study in
which the goal is to make inferences about a population from a sample. This study
utilized Krejcie& Morgan (1970) sample size table to come up with an adequate sample
24
size. The sample size table allows the researcher to determine the sample size for a given
population with 95% certainty. To obtain an appropriate sample for the respondents,
Krejcie & Morgan (1970) sample size determination table will be used to sample the 2700
customers of Premier Realty Limited according to each of the three stratum (Appendix
III). Krejcie and Morgan (1970) formula used to determine the sample size
proportionately according to each stratum population:
S= X2NP (1-P)_______
d2 (N-l) + X2P (1-P)
Where
S= Required Sample Size.
N= Number of Customers of Premier Realty Limited Ltd.
P= Population proportion of individual that yield maximum possible sample size
(Assumed to be 0.5).
d= Degree of accuracy as reflected by amount of error to be tolerated (taken as
0.05).
X2=Table value of chi-square for one degree of freedom taken as 3.841 for 0.95.
According to Krejcie and Morgan (1970) (Appendix III) sample size determination table,
the appropriate sample size will be 336 as shown in Table 3.1.
Table 3.2 Sample Size Distribution
Population Strata Population size Sample Size Percentage
Customers who purchase land 2140 266 79.2
Customers on whose behalf the
company manage their rentals
472 59 17.5
Customers in the form of agencies 88 11 3.3
Total 2700 336 100
3.4 Data Collection Methods
Data collection is the precise and systematic collection of information that is relevant to
the purpose, objectives of the study. According to Mugenda and Mugenda (2003), data
collection is defined as the collection of information from a list of respondents in order to
25
draw a conclusion. Collection of data was from both primary and secondary sources.
Primary data collection involves going to the field and getting specific information with
regards to the objectives of the study. Secondary data collection involves getting
information from already existing sources (Sekaran & Bougie, 2013). Primary data was
collected using questionnaire. A questionnaire was used for data collection because it
offers considerable advantage in administration. A questionnaire is justified for use in
this study as it enhanced collection of quantitative data. Furthermore, a questionnaire
allowed for collection of data in a cost effective, easy and without the researchers
influence on the findings. It was also used to collect both quantitative and qualitative data
while interview guide was used to collect qualitative data only. The questionnaires
comprised of open and closed ended questions. Section A sought information on the
demographic information regarding gender, age, academic qualification and years of
experience.
Section B sought information regarding other items laid in the research objectives. The
second part of the questionnaire (section B) had questions to reflect the three research
objectives and it used a Likert scale. Respondents recorded the factors that influence them
most by indicating their agreement with each statement on a 1-5 Likert scale from the
strongly agree (1) to the strongly disagree (5). The Likert scale is chosen because it
allowed the researcher to perform statistical operations on the data collected from the
respondents (Sekaran & Bougie, 2010).
3.5 Research Procedure
According to Kombo and Tromp (2013) data collection is important in research, because
it allows for dissemination of accurate information and development of meaningful
programmes. Before the actual study, a pilot study was conducted on few respondents by
the researcher. A pilot study is a pre-test of the questionnaire on a small number of people
conducted to refine methodology before it is used in earnest. The purpose of the pilot
study was to validate the questionnaire by identifying problems with the research design
and give the researcher experience with participants, methodology and data collection.
The pre-test questionnaire was sent to the respondent sample in the same setting and the
same data collection and analysis techniques as was used in the final study. During the
pilot, the researcher dealt with questions that required clarification and rewording
(Walliman, 2011).
26
In order to ensure that the instruments used are valid and reliable, the researcher exposed
them to validity and reliability tests. The researcher discussed the validity of the
instruments contents with the supervisor to ensure that the instrument questions are
relevant for research questions, so that any ambiguity and inconsistency can be corrected.
To ensure reliability, the researcher carried out a pilot test on 7 staff from Premier Realty
Limited. The data from the pilot test was analyzed using Cronbach's alpha (α) which
determines the internal consistency of the research instrument, a coefficient value of
above 0.7 implies that the research instrument is reliable thus appropriate for use in this
study. According to Babbie (2004) a pilot study can comprise of between 4-10 members
of the target population whose response will be used to improve on the data collection
instrument. According to Bryman and Bell (2007), a pilot test helps to test the reliability
and validity of data collection instruments. The researcher collated the responses and
improvements suggested on the questionnaire.
The researcher then personally administered the questionnaires and conducted interviews
to the participants. The researcher explained the purpose, clarified points and motivated
the respondents to answer questions carefully. The participants answered the
questionnaires and interviews while the researcher waited for same day collection. The
essence of collecting the questionnaires on the same day was to avoid loss of the
questionnaires through misplacement or forgetfulness. The researcher collected data from
customers through both emails and link on phone found at the Premier Realty Limited
customer data base. The researcher administered the instruments through a drop and picks
later method so as to minimize the level of interruption in the target respondent’s daily
schedules. The researcher then made follow up calls to remind the respondents to fill and
return so as to ensure a high response rate.
The participants who were unwilling to share information and the questions were
encouraged not to evoke desired responses. To deal with limitations the researcher
applied informed consent, confidentiality, anonymity and courtesy to get and select
participants who were willing to participate in the study (Walliman, 2011). Before each
questionnaire was administered, the researcher explained to the respondents the
significance of the research study and the importance of the respondents’ data.
27
3.6 Data Analysis Methods
Data analysis is a process of bringing order, structure and meaning to the collected data.
Data was evaluated for usefulness, centrality and to test emergent understandings
(Sekaran & Bougie, 2013). After data is obtained through questionnaires and interviews,
they were edited and the questionnaire coded to make it easy for data entry. Quantitative
data was categorized and entered into a computer spread sheet in a standard format to
allow for computation of descriptive statistics. Thereafter the data was coded and
analyzed with the use of a computer in Statistical Package for Social Sciences (SPSS)
version 20 programs to produce frequencies, descriptive statistics in form of mean,
frequencies and percentages from the data analysis for each variable and inferential
statistics in the form of regression. Results of the study were then presented in tables and
figures. Qualitative data derived from interview guide was transcribed and grouped topics
into meaningful segments or themes
3.7 Chapter Summary
This chapter presents a logical sequence on how the study was carried out in order to
answer the research objectives highlighted in chapter one of this study. It has shown the
appropriate research design, identified the population of study and the data collection
tools, the research procedures and data analysis method. Most importantly, it has outlined
the sampling techniques that were used along with the data analysis methods. The next
chapter documents the results and findings of the study.
28
CHAPTER FOUR
4.0 RESULTS AND FINDINGS
4.1 Introduction
This chapter presents the analyzed results and findings of the study on the research
questions concerning the data collected from the respondents on factors affecting the
growth of real estate investment companies in Kenya and Premier Realty Limited in
particular. The first section covers the response rate. The second section is about the
background information, which presents demographic presentation of the respondents.
The other section deals with the objective questions as answered and the final section will
discuss the summary of the whole chapter.
4.2 Response Rate
A response rate is the absolute number of respondents or people took an interest in an
research study and it is displayed as rate. Response from the sampling frame for this study
were customers who purchase land, customers on whose behalf the company manage
their rentals and customers in the form of agencies that customers on whose behalf the
company sell properties for a commission. The sampling frame of this study came from
Premier Realty Limited customer data base and transaction records. The questionnaires
were distributed to 336customer respondents reacting to factors affecting the growth of
real estate investment companies in Kenya. Out of this 316 duly responded while 20 did
not making a response rate of 94.0% and Table 4.1 presents the reaction rate of the study.
From the study, 94.0% of the respondents took part in the study while 6.0% did not
respond. The research, thusly, infers that the reaction rate was a great idea to be utilized.
Table 4.1 Response Rate
Response Frequency Percentage
Respondent 316 94.0
Did not Respond 20 6.0
Total 336 100
4.3 Demographic Information
In terms socio-demographic information, the study sought to establish the gender, type of
customer, age, level of education, number of years they had dealt with Premier Realty
29
Limited and their income. Figure 4.1 demonstrates the outcome of the gender of the
respondents. From the figure, it showed that 63.3% of the respondents were male while
36.7% were female. The findings suggest that the male dominated the property and real
estate business.
4.3.1 Gender
The respondents were asked to state their gender and Figure 4.1 presents the findings.
Figure 4.1: Gender of the Respondents
4.3.2 Type of Customer
The respondents were asked to state the type of customer they were and Figure 4.2
presents the findings. Figure 4.2 shows that majority 79.0% were customers who had
purchased land from Premier Reality Limited, 17.4% were those customers on whose
behalf the company manage their rentals and 3.6% of the respondents were customers in
the form of agencies.
63.3%
36.7%
0
10
20
30
40
50
60
70
80
Male Female
79.0%
17.4%
3.6%
0
10
20
30
40
50
60
70
80
90
Customers whoPurchased Land
Customers on whosebehalf the Co. Manage
Customers in the form ofAgencies
30
Figure 4.2: Type of Customer
4.3.3 Age of the Respondents
Age of the respondent is a significant factor of study in a population. It helps in planning
and making policies since certain behavioral characteristics are attributed to certain age
sets and groups. The respondents were asked to state their age and Figure 4.3 presents the
findings. As shown from the findings, majority 47.5% of the investors in real estate were
aged 31-40 years followed by 25.3% aged 21-30 years and 19.0% were 41-50 years old.
This therefore implies that young people aged between 21 to 40 years have in one way or
the other invested in the property assets, a majority of them being men. This trend is
attributed to the growing population of young people who are forward-looking, armed
with investments plans and who are money hungry.
Figure 4.3: Age of the Respondents
4.3.4 Level of Education
The respondents were asked to state their level of education and Figure 4.2 presents the
findings. As shown in Figure 4.4, majority 120 (38.0%) of the respondents had middle
college level of education, followed by 90 (28.5%) with bachelor degree level of
education and 80 (25.3%) with secondary school level of education. The study further
revealed that 14 (4.4%) had post graduate degree level of education and 10 (3.2%) with
primary school level while only 2 (0.6%) had no education. The finding implies those
majorities had secondary school level of education and above and therefore were
0.6%
25.3%
47.5%
19.0%
7.6%
0
5
10
15
20
25
30
35
40
45
50
Below 20 Years 21-30 Years 31-40 Years 41-50 Years 51-60
31
competent enough to answer to issues related to factors affecting the growth of real estate
investment companies in Kenya.
Figure 4.4: Level of Education
4.3.5 Years of Dealing with Real Estate
The respondents were asked to state the number of years they had dealt with Premier
Realty Limited, the respondents stated as presented in Table 4.2.At the point when
requested to demonstrate to what extent they had dealt with premier Realty Company,
Table 4.2 demonstrates that 40.0% showed they had dealt with it for over 15 years.
Twenty two point eight percent 22.8% for between 11 years and 15 years, (20.0%) had
dealt with it less than 5 years. The findings further revealed that 17.2% had dealt with this
company for 5-10 years.
Table 4.2: Years of Dealing with Real Estate
Years Frequency Percentage
Less than 5 Years 63 20.0
5-10 Years 54 17.2
11-15 Years 72 22.8
Above 15 Years 127 40.0
Total 316 100
0.6%3.2%
25.3%
38.0%
28.5%
4.4%
0
5
10
15
20
25
30
35
40
NoEducation
PrimaryLevel
SecondaryLevel
MiddleCollege
BachelorDegree
PostGraduate
32
4.3.6 Income per Month
In this segment, the respondents were approached to state their income and Table 4.2
presents the findings. As presented in Table 4.2 above, majority 31.6% had an average
income of 301,000-400,000 followed by 29.4% who were earning between 101,000-
200,000. The study further revealed that 20.0% earned 201,000- 300,000 and 15.8%
earned below 200,000 while just 3.2% earned above 400,000 Kenya Shillings
respectively. This therefore implies that the amount of income one has can dictate the
buying power and therefore can influence the extent to which one can invest in real
estates.
Table 4.3: Income per Month
Income Frequency Percentage
Below 100,000 50 15.8
101,000-200,000 91 29.4
201,000-300,000 63 20.0
301,000-400,000 100 31.6
Above 400,000 10 3.2
Total 316 100
4.4 Customer related factors on Growth of Real Estate
Objective one of the study sought to establish the extent to which customer related factors
influence the growth of Real Estate at Premier Realty Limited.
4.4.1 Customer Attitude
The respondents were asked to state the extent to which customer related factors
influenced the growth of Premier Realty Limited which is a real estate company. They
indicated their agreement with each statement on a 1-5 Likert scale from the strongly
disagree (1) to the strongly agree (5). The findings were as presented in Table 4.4. From
the findings the respondents stated that they will again buy a second property from
Premier Realty Limited with a mean of 4.42, those who said the company was accessible
was at a mean of 4.41 and SD of 1.16.
33
Table 4.4: Customer Attitude
Statement SD D Neither
A or D
A S A Mean Std
Deviat
I will again buy a
second property from
Premier Realty Limited
4.2% 3.5% 3.5% 53.0% 35.3% 4.42 1.34
Premier Realty Limited
management are
accessible
6.6% 3.2% 2.0% 55.3% 32.9% 4.41
1.16
4.4.2 Increasing Affordability
As presented in Table 4.5, the respondents indicated that The study also revealed that
customers at a scale of a mean of 4.18 and SD of 1.33 of would recommend Premier
Realty Limited to friend, customers agreed at a scale 4.20 and SD1.16 that they had
benefited from their instalment payment plan however those who preferred to buy
property in cash were at a lower scale of 1.50 and SD of 1.67.
Table 4.5: Increasing Affordability
Statement SD D Neither
A or D
A S A Mean Std
Deviat
I would recommend
Premier Realty Limited
to a friend
6.8% 3.9% 5.5% 58.4% 25.3% 4.18 1.33
I have benefited from
their installment
payment plan
4.7% 4.7% 6.7% 40.3% 43.6% 4.20 1.16
I prefer to buy my
property cash
36.4% 32.2% 0.6% 17.7% 12.9% 1.50 1.67
4.4.3 Availability and Property Price
The respondents were asked to state the extent of their agreement in terms of availability
and property prices. Table 4.6 indicated that, customers agreed that the process of getting
a property from Premier Realty Limited was convenient with a mean of 4.20 and a SD of
1.18 and those who agreed that the prices of the properties offered by Premier Realty
Limited are affordable were at mean scale of 3.10 and SD of 1.17 while customers also
34
agreed that information was readily available at Premier Realty Limited with a mean of
4.5 and SD of 1.18.
Table 4.6: Availability and Property prices
Statement SD D Neither
A or D
A S A Mean Std
Deviat
The process of getting a
property from Premier
Realty Limited is
convenient
5.4% 6.4% 4.2% 44.7% 39.3% 4.20 1.18
The prices of the
properties offered by
Premier Realty Limited
are affordable
22.2% 12.3% 3.5% 39.6% 22.2% 3.10 1.17
Information is readily
available at Premier
Realty Limited
3.8% 3.2% 3.2% 34.2% 55.7% 4.50
1.18
4.4.4 Customer Confidence
In terms of customer confidence, it was agreed that the process of getting property from
Premier Realty was convenient (Mean 4.20, SD 1.18), those who highly rated Premier
Realty Limited compared to other players in the market were with a mean of 3.33 and SD
of 1.67. It was also established that customers who agreed that Premier Realty Limited
offered good service were with a mean of 3.24 and SD of 1.35 and. it was also established
by customers that staff at Premiere Realty Limited understood their products with a mean
of 3.67 and SD of 1.19 as shown Table 4.7
Table 4.7: Customer Confidence
Statement SD D Neither
A or D
A S A Mean Std
Deviat
The process of getting a
property from Premier
Realty Limited is
convenient
5.4% 6.4% 4.2% 44.7% 39.3% 4.20 1.18
I highly rate Premier
Realty Limited
compared to other
players in the market
21.6% 11.1% 0.7% 32.8% 33.8% 3.33 1.67
Premier Realty Limited
offer good service
15.9% 17.5% 1.6% 41.4% 23.6% 3.25 1.35
Staff at Premiere Realty
Limited understand their
products
5.4% 5.4% 15.8% 41.8% 31.6% 3.67 1.19
35
4.4.5 Inferential Statistics
4.4.5.1 Correlation Matrix between Customers related Factors and Growth of Real
Estate
Table 4.8 shows that relationship between customers related factors and growth of real
estate had a correlation coefficient of 0.618 and an alpha value of 0.001. This therefore
shows that the relationship between the two variables had statistical significance and was
not just by chance. This is because the alpha value was below 0.05 for it to have statistical
significance.
Table 0.8: Correlation Matrix between Customer related Factors and Growth of
Real Estate
Growth of Real
Estate
Customers related
Factors
Growth of Real Estate Pearson
Correlation
1 .618**
Sig. (2 Tailed) . .001
N 316 316
Customers related Factors Pearson
Correlation
.618** 1
Sig. (2 Tailed) .001 .
N 315 316
** Correlation is significant at the 0.05 level (2-tailed).
4.4.5.2 Model Summary for Effect of Customers related Factors and Growth of Real
Estate
Table 4.9 presents the regression model results for the relationship between customer
related factors and growth of real estate. The results show that customer related factors
accounted for a 37.2 % on the growth of Premier Realty Real Estate Limited.
Table 4.9: Model Summary for Effect of Customers related Factors and Growth of
Real Estate
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
1 .618 .382 .372 0.38167
36
4.4.5.3 Regression Coefficient for Effect of Customers related Factors and Growth of
Real Estate
Table 4.10 presents the regression results for the relationship between customer related
factors and its effect on growth of real estate. The results show that customers related
factors had a positive and significant effect on growth of real estate and for every single
unit increase in customers related factors; there would be a 37.2% effect on growth of real
estate.
Table 4.10: Regression Coefficient for Effect of Customers related Factors and
Growth of Real Estate
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
B Std. Error Beta
1 (Constant) 2.679 .278 9.610 .000
Effect of Customers .372 .145 .618 1.459 .000
4.5 Socio-demographic Factors related to the Growth of Real Estate
The second objective of the study was to establish the extent to which socio-
demographic factors were related to the growth of real estate at Premier Realty Limited in
Kenya.
4.5.1 Demographic Shift
The respondents were asked to state the extent to which they agreed with various
statements of demographic shift on a likert scale of 1 – 5, where: 1 = strongly disagree,
and 5 = strongly agree. The findings of the study revealed that incomes of individuals
influence property investment decisions with a mean of (4.45, SD 1.19). As shown in
Table 4.11 from the findings, the respondents indicated that they would like to buy
property near their friends or colleagues (mean 4.31, SD 1.17).
Table 4.11: Demographic Shift
Statement SD D Neither
A or D
A S A Mean Std
Deviat
My incomes influences my
property investment
decisions
2.9% 2.6% 5.5% 61.6% 27.4% 4.45 1.19
I would like to buy property
near my friends or colleagues
8.5% 4.6% 0.7% 45.9% 40.3% 4.31 1.17
37
4.5.2 Gender Difference
Table 4.12 shows that the respondents indicated that gender influenced decision to invest
in property (mean 4.34, SD 1.22). Out of the many aspects that can influence a
customer’s decision-making behavior, one of the major factors is gender. Men and
women approach shopping with different motives, perspectives, rationales, and
considerations. Gaining an understanding of how gender differences influence purchase
decisions and recognizing gender-specific tendencies (not stereotypes) is important for
any business that sells to people – and wants to do so more effectively. More noticeable
expectation adjustment behavior was observed in men than in women.
Table 4.12: Gender Difference
Statement SD D Neither
A or D
A S A Mean Std
Deviat
Gender influences decision
to invest in property
3.3% 1.6% 8.2% 32.8% 54.0% 4.34 1.22
4.5.3 Age and Property Investment
Another aspect of demography was age and the respondents agreed that age did not deter
them from buying my first property (4.25, SD 1.33) as shown in Table 4.13.
Table 4.13: Age and Property Investment
Statement SD D Neither
A or D
A S A Mean Std
Deviat
My age did not deter me
from buying my first
property
5.1% 5.7% 4.1% 45.7% 39.3% 4.25 1.33
4.5.4 Size of Family and Property Investment
The respondents informed this study that the size of family also influenced decision to
invest in a property with a mean of (4.43, SD 1.22). The study also established that the
family participates in the decision making to invest in a property (2.82, 1.55) as shown in
Table 4.14.
38
Table 4.14: Size of Family and Property Investment
Statement SD D Neither
A or D
A S A Mean Std
Deviat
The size of my family
influences my decision to
invest in a property
2.0% 2.7% 6.8% 42.6% 45.9% 4.43 1.22
My family participate in the
property buying decision
24.4% 15.2% 3.8% 23.8% 32.7% 2.82 1.55
4.5.5 Location, Amenities and Property Investment
The findings were as presented in Table 4.15. Customers agreed that location of a
property influences buying decision with a mean of 4.42 and SD of 1.17, they also agreed
that presence of social amenities like roads, electricity and water influences buying
decision with a mean of 4.60 and SD of 1.23. The respondents also agreed that they were
willing to purchase land in sub urban areas that are slightly out of town (3.43, SD 1.11),
the respondents were also willing to purchase a house in the urban setup only (mean 3.20,
SD 1.67).
Table 4.15: Location, Amenities and Property Investment
Statement SD D Neither
A or D
A S A Mean Std
Deviat
Location of a property
influences my buying
decision
3.5% 5.3% 2.8% 52.8% 35.6% 4.42 1.17
Presence of social amenities
like roads, electricity and
water influences my buying
decision
4.2%) 1.9% 1.9% 54.2% 37.7% 4.60 1.23
I am willing to purchase a
house in the urban setup only
17.1% 15.8% 3.2% 31.6% 32.3% 3.20 1.67
I am willing to purchase land
in sub urban areas that are
slightly out of town
12.9% 17.7% 0.6% 32.2% 36.4% 3.43 1.11
39
4.5.6 Inferential Statistics
4.5.6.1 Correlation Matrix between Socio-demographic Factors and Growth of Real
Estate
Table 4.16 shows that relationship between socio-demographic factors and growth of real
estate had a correlation coefficient of 0.720 and an alpha value of 0.000. This therefore
shows that the relationship between the two variables had statistical significance and was
not just by chance. This is because the alpha value was below 0.05 for it to have statistical
significance.
Table 0.16: Correlation Matrix between Socio-demographic Factors and Growth of
Real Estate
Growth of
Real Estate
Socio-
demographic Factors
Growth of Real Estate Pearson
Correlation
1 .720**
Sig. (2 Tailed) . .001
N 316 310
Socio-demographic Factors Pearson
Correlation
.720** 1
Sig. (2 Tailed) .001 .
N 310 316
** Correlation is significant at the 0.05 level (2-tailed).
4.5.6.2 Model Summary for Effect of Socio-demographic Factors and Growth of
Real Estate
Table 4.17 presents the regression model results for the relationship between Socio-
demographic factors and growth of real estate. The results show that Socio-
demographic factors accounted for a 50.9% on the growth of Premier Realty Real
Estate Limited.
Table 4.17: Model Summary for Effect of Customers related Factors and Growth of
Real Estate
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
1 .720 .518 .509 0.4216
40
4.5.6.3 Regression Coefficient for Effect of Socio-demographic Factorsand Growth
of Real Estate
Table 4.18 presents the regression results for the relationship between Socio-
demographic factors and its effect on growth of real estate. The results show that Socio-
demographic factors had a positive and significant effect on growth of real estate and for
every single unit increase in Socio-demographic factors; there would be a 50.9% effect on
growth of real estate.
Table 4.18: Regression Coefficient for Effect of Socio-demographic Factors and
Growth of Real Estate
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
B Std.
Error
Beta
1 (Constant) 2.785 .227 9.772 .000
Socio-
demographic Factors
.509 .147 .720 1.447 .000
4.6 Managerial Factors/ Practices related to Growth of Real Estate
The third objective of the study sought to establish the extent to which managerial factors/
practices factors were related to the growth of real estate at Premier Realty Limited in
Kenya.
4.6.1 Risk Management and Growth
The respondents were asked to state the extent to which they agreed with on a likert scale
of 1 – 5, where: 1 = strongly disagree, 2 = disagree, 3 = neither agree nor disagree, 4 =
agree and 5 = strongly agree. The findings were as presented in Table 4.19. From the
study customers agreed that Premier Realty Limited deliver on their promise (mean 3.22,
SD 1.27), they also agreed that Premier Realty Limited offered complimentary services
like valuation; survey and consultancy that support the end to end purchase process (mean
3.95, SD 1.16). The study further revealed that Premier Realty Limited tailored flexible
solutions to meet customer needs (mean 3.82, 1.26) as shown in Table 4.19.
41
Table 4.19: Risk Management and Growth
Statement SA D Neither
agree or
disagree
A SD Mean Std
Devia
Premier Realty
Limited deliver on
their promise
8.6 % 11.1% 15.8% 31.6% 32.7% 3.22 1.27
Offers
complimentary
services like
valuation, survey
and consultancy that
support the end to
end purchase process
3.2% 2.2% 15.9% 45.5% 33.1% 3.95 1.16
Has tailor flexible
solutions to meet my
needs
15.1% 7.9% 0.7% 39.3% 37.0% 3.82 1.26
4.6.2 Management/Leadership Style and Growth
The findings showed that Premier Realty Limited was committed to offering quality
service to its customers (mean 4.25, SD 1.12), The attitude of managers influences the
extent to which customers invested in property with them (Mean 3.44, SD 1.14), Working
hours are convenient (Mean 3.33, SD 1.18), wide range of products (Mean 3.64, SD 1.11)
and prompt information on new product (Mean 2.90, SD 1.78) as shown in Table 4.20
Table 4.20: Management/Leadership Style and Growth
Statement SA D Neither
agree or
disagree
A SD Mean Std
Devia
Committed to
offering quality
service to its
customers
5.1% 5.7% 4.2% 45.7% 39.3% 4.25 1.12
Working hours are
convenient
14.6% 16.2% 2.6% 33.4% 33.1% 3.33 1.18
Has a wide range of
products
7.8% 15.6% 3.9% 35.7% 37.0% 3.64 1.11
always kept
informed Limited
23.6% 15.0% 3.5% 24.2% 33.8% 2.90 1.78
42
4.6.3 Management Attitude and Growth
As shown in Table 4.21, the study was informed that Premier Realty Limited deliver on
their promise (Mean 3.22, SD 1.27), committed to offering quality service to its
customers (Mean 4.25, SD 1.12) and The attitude of managers (Mean 3.44, SD 1.14).
Table 4.21: Management Attitude and Growth
Statement SA D Neither
agree or
disagree
A SD Mean Std
Devia
Premier Realty
Limited deliver on
their promise
8.6 % 11.1% 15.8% 31.6% 32.7% 3.22 1.27
Committed to
offering quality
service to its
customers
5.1% 5.7% 4.2% 45.7% 39.3% 4.25 1.12
The attitude of
managers
12.9% 17.7% 0.6% 32.3% 36.5% 3.44 1.14
4.6.4 Communication and Growth
In terms of communication mechanism as an attribute of managerial practices, the study
revealed that the company used effective communication channels to reach them (Mean
4.35, SD 1.26), had a wide range of products (Mean 3.64, SD 1.11) and always kept
customers informed of the new product offering by Premier Realty Limited (Mean 2.90,
SD 1.78) as shown in Table 4.22
Table 4.22: Communication and Growth
Statement SA D Neither
agree or
disagree
A SD Mean Std
Devia
Use effective
communication
channels to reach me
3.3% 1.6% 8.2% 32.8% 54.1% 4.35 1.26
Has a wide range of
products
7.8% 15.6% 3.9% 35.7% 37.0% 3.64 1.11
I am always kept
informed of the new
product offering by
Premier Realty
Limited
23.6% 15.0% 3.5% 24.2% 33.8% 2.90 1.78
43
4.6.5 Public Relations and Growth
In terms of public relation, the customers informed this study that the company was one
of the leading Real Estate Companies in the industry (mean 3.52, SD 1.46), and that
Premier Realty Limited had tailor flexible solutions to meet my needs (Mean 3.82 SD
1.26). This information provided this study on the best areas to invest in property
purchase. Has tailor flexible solutions to meet my needs as shown in Table 4.23
Table 4.23: Public Relations and Growth
Statement SA D Neither
agree or
disagree
A SD Mean Std
Devia
Is one of the leading
Real Estate
Companies in the
industry
13.2% 9.9% 6.6% 33.0% 37.3% 3.52 1.46
Has tailor flexible
solutions to meet my
needs
15.1% 7.9% 0.7% 39.3% 37.0% 3.82 1.26
4.6.6 Inferential Statistics
4.6.6.1 Correlation Matrix between Managerial Factors/ Practices and Growth of
Real Estate
Table 4.24 shows that relationship between managerial factors/ practices and growth of
real estate had a correlation coefficient of 0.815and an alpha value of 0.003. This
therefore shows that the relationship between the two variables had statistical significance
and was not just by chance. This is because the alpha value was below 0.05 for it to have
statistical significance.
44
Table 0.24: Correlation Matrix between Managerial Factors/ Practices and Growth
of Real Estate
Growth of
Real Estate
Managerial
Factors/ Practices
Growth of Real Estate Pearson
Correlation
1 .815**
Sig. (2 Tailed) . .003
N 315 310
Managerial Factors/
Practices
Pearson
Correlation
.815** 1
Sig. (2 Tailed) .003 .
N 310 315
** Correlation is significant at the 0.05 level (2-tailed).
4.6.6.2 Model Summary for Effect of Managerial Factors/ Practices and Growth of
Real Estate
Table 4.25 presents the regression model results for the relationship between managerial
factors/ practices and growth of real estate. The results show that managerial factors/
practices factors accounted for a 65.4% on the growth of Premier Realty Real
Estate Limited.
Table 4.25: Model Summary for Effect of Customers related Factors and Growth of
Real Estate
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
1 .815 .664 .654 0.5212
4.6.6.3 Regression Coefficient for Effect of Managerial Factors/ Practices and
Growth of Real Estate
Table 4.25 presents the regression results for the relationship between managerial factors/
practices and its effect on growth of real estate. The results show that managerial factors/
practices had a positive and significant effect on growth of real estate and for every single
unit increase in managerial factors/ practices; there would be a 65.4% effect on growth of
real estate.
45
Table 4.25: Regression Coefficient for Effect of Customers related Factors and
Growth of Real Estate
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
B Std.
Error
Beta
1 (Constant) 2.785 .227 9.915 .000
Managerial factors/
practices
.654 .147 .720 1.418 .000
4.7 Growth of Real Estate
The main dependent variable was economic growth of Premier Realty Limited. The
respondents were asked to state the extent to which they agreed with on a likert scale of 1
– 5, where: 1 = strongly disagree, 2 = disagree, 3 = neither agree nor disagree, 4 = agree
and 5 = strongly agree on various aspects regarding economic growth of property
industry.
4.7.1 Descriptive Statistics
The findings were as presented in Table 4.26. The findings in table 4.26 confirms shows
that property prices are high with a mean 4.20 and SD 1.67, the customers indicated that
the return on investment for the real estate industry was high (mean 3.93, SD 1.16).
Interestingly respondents disagreed that the mortgage interest rates encourage the growth
of the real estate industry (mean 1.85, SD 1.27), the study was informed that there was
increase willingness by banks to lend money to client to purchase property (mean 3.23,
SD 1.52).
The findings of this study indicated that there was high growth in residential construction
(mean 3.73, SD 1.09), there was high growth in commercial construction (mean 3.84, SD
1.13) and increased availability of properties in the market (mean 4.17 SD 1.29). It was
also interesting to note that the customers strongly agreed that actually there was an
increase in property sales (mean 4.10, SD 1.34), the customers also agreed that there was
an increase in the rental prices in residential areas (mean 3.88, SD 1.45) and finally the
customers agreed that there has been an increase in the interest of home ownership (mean
3.86, SD 1.34) and all these are indicators of economic growth.
46
Table 4.26: Growth of Real Estate
Statement SD D Neutral A SA Mean STD
Devia
Property Prices are high 6.8% 6.4% 2.9% 48.2% 35.7% 4.20 1.67
The return on investment
for the real estate industry
is high
9.6%
10.9% 0.9% 61.1% 17.5% 3.93 1.16
The Mortgage interest
rates encourages the
growth of the real estate
industry
31.3% 25.3% 6.3%
22.1% 14.9% 1.85 1.27
There is increase
willingness by banks to
lend money to client to
purchase property
15.9% 13.0% 6.5% 32.5% 32.1% 3.23 1.52
There is high growth in
residential construction
9.3% 9.6% 6.4% 35.4% 39.2% 3.73 1.09
There is high growth in
commercial construction
7.7% 9.0% 6.4% 36.3% 40.5% 3.84 1.13
There is increased
availability of properties
in the market
6.7% 7.8% 2.0% 47.6% 35.8% 4.17 1.29
There is an increase in
property sales
3.9% 8.9% 5.3% 43.1% 38.8% 4.10 1.34
There is an increase in the
rental prices in residential
areas
6.2% 11.1% 2.9% 44.6% 32.9% 3.88 1.45
There has been an
increase in the interest of
home ownership
10.1% 8.4% 4.4% 40.7% 36.4% 3.86 1.34
4.7.2Regression Analysis
Multiple regression analysis described by the model below was used to make inferences
between the independent variables and the dependent variable. The study used the
regression model Y = β0+β1X2+β2X2. + β3X3+β4X4.
The study regressed components of variables including customer related factors, socio-
demographic factors and managerial factors/ practices that may affect growth of real
estate at Premier Realty Limited in Kenya. The growth of real estate was the dependent
variables while customer related factors, socio-demographic factors and managerial
factors/ practices were the independent variables. The study used the regression model:
Y = β0+β1X2+β2X2.+ β3X3+β4X4.
47
Where Y = Dependent Variable = Growth of Real Estate
β0+β1 = coefficients of the independent variables (customer related, socio-
demographic and managerial factors/ practices).
To achieve this, a multiple linear regression was done on the following indicators
and Table 4.16 presents the findings. a Dependent Variable: Growth of Real Estate
Y= Dependent Variable= Growth of Real Estate
The established combined multiple linear regression equation becomes:
Y = 2.778 = 0.236 X1 + 0.251 X2 +0. 421 X3 + beta
Table 4.27 shows that independent variables like customer related factors influenced the
growth of real Estates by 23.6%, socio-demographic factors by 25.1% and managerial
practices by 42.1% as they had positive coefficients. This implies that the variables with
positive coefficients were directly affecting the growth of Premier Realty Limited. This
therefore means that the mentioned factors influenced the growth of the Company by
90.8%, the rest 9.2% could be as a result of other reasons.
Table 0.27: Results of Regression of Independent Variables against Growth of Real
Estate
Coefficients (a)
Mode
l
Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
B Std. Error Beta
1 (Constant) 2.778 .278 9.610 .000
Customer related factors .236 .145 .085 1.459 .002
Socio-demographic factors .251 .524 .056 .952 .001
Managerial factors/Practices .421 .267 .280 5.105 .000
48
CHAPTER FIVE
5.0 DISCUSSIONS, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
This chapter presents discussion, conclusions and recommendations of the study. It gives
a summary of the study, which includes the objectives, methodology and findings. It also
discusses the major findings of the study looking at the specific objectives and comparing
findings of other studies and scholars. In addition, the chapter presents the conclusions of
the study based on the objectives and recommendations for the study and further studies.
5.2 Summary
The general objective of this study was to examine the factors affecting the growth of real
estate investment companies in Kenya a case of Premier Realty Limited. The study
specifically established customer, socio-demographic factors and managerial factors/
practices that influence the growth of real estate at Premier Realty Limited.
The study used a descriptive survey design. In this study, the target population were
customers who purchase land, customers on whose behalf the company manage their
rentals and the customers in the form of agencies that is clients who want to sell their
property. The target population was a customer base of 2700 respondents. The population
was stratified into three categories with different characteristics i) Customers who
purchase land –this is where the company buy large parcels of land sub divide and sell to
clients and has a population of 2140 respondents ii) Rentals and Management- these are
customers on whose behalf the company manage their rentals and has population of 472
respondents. Finally iii) Agency -customers in the form of agencies: this is where the
company has clients who want to sell their property thus they bring the same to sell on
their behalf and for a commission, their population is 88 respondents
In terms of sampling, the study first of all stratified the customers according to their
categories of either customers who purchase land, customers on whose behalf the
company manage their rentals and the customers in the form of agencies that is a clients
who want to sell their property; then randomly sampled each member from the three
categories so that each has equal chance of participation in the study. To obtain an
appropriate sample for the respondents, Krejcie& Morgan (1970) sample size
determination table was used to sample the 2700 customers of Premier Realty Limited
according to each of the three stratum. The appropriate sample size for a population of
2700 was 336 respondents. Collection of data was from both primary and secondary
49
sources. Primary data was collected using questionnaire. A questionnaire was used for
data collection because it offers considerable advantage in administration. A
questionnaire was justified for use in this study as it enhanced collection of quantitative
data. Furthermore, a questionnaire allowed for collection of data in a cost effective, easy
and without the researchers influence on the findings. It was also used to collect both
quantitative and qualitative data while interview guide was used to collect qualitative data
only. The questionnaires comprised of open and closed ended questions
Objective one of the study sought to establish the extent to which customer related factors
influence the growth of Real Estate at Premier Realty Limited. In summary, the
respondents stated that they will again buy a second property from Premier Realty
Limited; they indicated that the company was accessible. The study also revealed that
customers would recommend Premier Realty Limited to friend; the customers agreed that
they had benefited from their instalment payment plan however there were those who
preferred to buy property in cash. Customers agreed that the process of getting a property
from Premier Realty Limited was convenient and highly rated Premier Realty Limited
compared to other players in the market. It was established that customers who agreed
that Premier Realty Limited offered good service and that the prices of the properties
offered by Premier Realty Limited were affordable. Customers agreed that information
was readily available at Premier Realty Limited, it was also established by customers that
staff at Premiere Realty Limited understood their products.
The second objective of the study was to establish the extent to which socio-
demographic factors were related to the growth of real estate at Premier Realty Limited in
Kenya. Customers agreed that location of a property influences buying decision; they also
agreed that presence of social amenities like roads, electricity and water influences
buying decision. The findings of the study also revealed that incomes of individuals
influence property investment decisions. the respondents informed this study that the size
of family also influences decision to invest in a property. The study also established that
the size of family influence the decision to invest in a property, the respondents were
willing to purchase land in sub urban areas that are slightly out of town and they also
agreed that age did not deter them from buying my first property. From the findings, the
respondents indicated that they would like to buy property near their friends or
colleagues; they also indicated that gender influence decision to invest in property, the
50
respondents were also willing to purchase a house in the urban setup only and that
customers indicated that their families participated in the property buying decision.
The third objective of the study sought to establish the extent to which managerial factors/
practices factors were related to the growth of real estate at Premier Realty Limited in
Kenya. From the study customers agreed that Premier Realty Limited deliver on their
promise, they also agreed that Premier Realty Limited offered complimentary services
like valuation; survey and consultancy that support the end to end purchase process. The
study was informed that Premier Realty Limited was committed to offering quality
service to its customers, the customer respondent also confirmed that Premier Realty
Limited used effective communication channels to reach them and it was reported that the
attitude of managers in Premier Realty Limited influenced the extent to which customers
invested in property with them. The study further revealed that Premier Realty Limited
tailored flexible solutions to meet customer needs, working hours are convenient, that the
company was one of the leading Real Estate Companies in the industry. In summary the
Company had wide range of products and that Premier Realty Limited always kept its
customers informed of the new product.
The main dependent variable was economic growth of Premier Realty Limited. The
findings confirmed that property prices were high, customers also indicated that the return
on investment for the real estate industry was high. Interestingly respondents disagreed
that the mortgage interest rates encourage the growth of the real estate industry, the study
was informed that there was increase willingness by banks to lend money to client to
purchase property. The findings of this study indicated that there was high growth in
residential construction, there was high growth in commercial construction and increased
availability of properties in the market. It was also interesting to note that the customers
strongly agreed that actually there was an increase in property sales, the customers also
agreed that there was an increase in the rental prices in residential areas and finally the
customers agreed that there has been an increase in the interest of home ownership and all
these are indicators of economic growth.
5.3 Discussion of the Results
5.3.1 Customer related factors on Growth of Real Estate
The respondents stated that they will again buy a second property from Premier Realty
Limited; they indicated that the company was accessible. The study also revealed that
customers would recommend Premier Realty Limited to friend; the customers agreed that
51
they had benefited from their installment payment plan however there were those who
preferred to buy property in cash. Customers agreed that the process of getting a property
from Premier Realty Limited was convenient and highly rated Premier Realty Limited
compared to other players in the market. This concurs with Kokli and Vida (2009) who
indicated that customer satisfaction is a conclusive factor in guaranteeing an
organization's financial achievement including buying conduct of housing. DeLisle
(2012) agrees that customer mentalities, inclinations, and discernment into monetary
models of housing and this interest is basic to any decrease of the enormous edge of
unexplained difference in housing utilization conduct.
The study revealed that customers would recommend Premier Realty Limited to friend. It
was established that customers who agreed that Premier Realty Limited offered good
service and that the prices of the properties offered by Premier Realty Limited were
affordable. Customers agreed that information was readily available at Premier Realty
Limited, it was also established by customers that staff at Premiere Realty Limited
understood their products. Yusliza and Ramayah (2011) also indicated that the way
individuals respond to and are disposed towards, an object can also be used to mean
attitude and this can guide the customer as to whether to inform a friend or not. From this
study, the customers benefited from their installment payment plan however those who
preferred to buy property in cash. As Magazine (2017) rightly puts it, willingness to
acquire a property depends mainly on the income of the buyer. It confirms Abelson and
Chung (2005) who found that price and affordability of houses is one of the factors that
affect real estate purchaser’s decisions. Han & Kim, (2010) agrees that consumer
confidence plays an important role in determining the real estate demand.
5.3.2 Socio-demographic Factors related to the Growth of Real Estate
Customers agreed that location of a property influences buying decision; they also agreed
that presence of social amenities like roads, electricity and water influences buying
decision. This confirms Shanu, (2015) who found out that socio-demographic factors
which include income, migration, population growth and gender had a direct influence on
the real estate market. Customers agreed that location of a property influences buying
decision; they also agreed that presence of social amenities like roads, electricity and
water influences buying decision. The findings of the study also revealed that incomes of
52
individuals influence property investment decisions. the respondents informed this study
that the size of family also influences decision to invest in a property. The study also
established that the size of family influence the decision to invest in a property, the
respondents were willing to purchase land in sub urban areas that are slightly out of town
and they also agreed that age did not deter them from buying my first property. The
findings of the study also revealed that incomes of individuals influence property
investment decisions. Abu Bakar (2014) agrees that population growth and ageing leads
to several real estate subsectors emerging. The respondents informed this study that the
size of family also influences decision to invest in a property.
From the findings, the respondents indicated that they would like to buy property near
their friends or colleagues; they also indicated that gender influence decision to invest in
property, the respondents were also willing to purchase a house in the urban setup only
and that customers indicated that their families participated in the property buying
decision. Carnoske et al (2010) also indicated that size of family and income influence the
decision to invest in a property. The respondents were willing to purchase land in sub
urban areas that are slightly out of town and they also agreed that age did not deter them
from buying my first property. Bibi-Maryam and Vikneswaran (2016) revealed that there
is a significant difference between gender and risk tolerance while there was no
significant difference between gender and financial literacy and also types of property
investment. In Kenya Ombongi (2014) concurs that that demographics overall had a
significant influence on choice of neighbourhood and choice of location of house; marital
status was the sole factor with a significant influence on source of financing.
5.3.3 Managerial Factors/ Practices related to Growth of Real Estate
The prevailing demand and supply conditions however point to the fast that the growth in
home ownership is constrained by the preferences in both modality of acquisition,
funding options and risks associated to housing development. From the study customers
agreed that Premier Realty Limited deliver on their promise, they also agreed that Premier
Realty Limited offered complimentary services like valuation; survey and consultancy
that support the end to end purchase process. This confirms Sharp (2013) who indicated
that leadership is extremely vital tool when trying to motivate others, especially when
creativity is lacking in order to deliver on the promise. Premier Realty Limited was
committed to offering quality service to its customers, the customer respondent also
53
confirmed that Premier Realty Limited used effective communication channels to reach
them and it was reported that the attitude of managers in Premier Realty Limited
influenced the extent to which customers invested in property with them.
The study was informed that Premier Realty Limited was committed to offering quality
service to its customers, the customer respondent also confirmed that Premier Realty
Limited used effective communication channels to reach them and it was reported that the
attitude of managers in Premier Realty Limited influenced the extent to which customers
invested in property with them. The study further revealed that Premier Realty Limited
tailored flexible solutions to meet customer needs, working hours are convenient, that the
company was one of the leading Real Estate Companies in the industry. Kamal et al
(2016) concurs that attitude of both sellers and buyers in very important in property
business. They confirmed that buying intention is strongly influenced by buying attitude
of the customers. On the other hand, Herrick and Gardiner 2014) noted that
communication as an aspect of managerial practices informs and persuades, motivates
and encourages and even comforts. Communication also spawns productivity and
business growth. A good communication plan can increase the success and the potential
earnings of a real estate company.
5.4 Conclusions
5.4.1 Customer related factors on Growth of Real Estate
The study concludes that one of the main aims of each company’s development is to
promote cooperation with its clients. Customer satisfaction is progressively observed as a
conclusive factor in guaranteeing an organization's financial achievement. Thereforeit is
imperative that employees at PR understand their products and this established that this
was done by gauging the confidence levels of their sales team through the responses from
the customers. Consumer confidence plays an important role in determining the real
estate demand. When a consumer shows willingness in taking a risk by investing in a
property, it shows their confidence in the investment. This was revealed in the study
where customers would recommend Premier Realty Limited to friend thus an opportunity
to use referral and the next marketing options. Customer confidence is important to keep
the market going upwards. Business confidence results in more job creation and hiring
that spikes the demand for residential units. Demand for houses depends on consumer
confidence. In particular, it depends on people’s confidence about the future of the
economy and housing market. The study therefore concurs that the process of getting a
54
property from Premier Realty Limited was convenient and highly rated Premier Realty
Limited compared to other players in the market due to customer confidence.
5.4.2 Socio-demographic Factors related to the Growth of Real Estate
Out of the many aspects that can influence a customer’s decision-making behavior, one of
the major factors was gender. Men and women approach shopping with different motives,
perspectives, rationales, and considerations. Gaining an understanding of how
gender differences influence purchase decisions and recognizing gender-specific
tendencies(not stereotypes!) is important for any business that sells to people – and wants
to do so more effectively. More noticeable expectation adjustment behavior was observed
in men than in women. The study established that other socio-demographic aspects like
the size of family influenced the decision to invest in a property, the respondents were
willing to purchase land in sub urban areas that are slightly out of town and they also
agreed that age did not deter them from buying my first property. Socio-demographic
factors overall have a significant influence of the environmental factors that affect the
quality of residential housing. This is based on the findings of the study that
demographics in deed explain choice of the social setting where a household chooses to
buy an apartment house (neighborhood) and location related considerations such as
amenities, good road network and availability of public utilities.
5.4.3 Managerial Factors/ Practices related to Growth of Real Estate
This study concludes that indeed Premier Realty Limited deliver on their promise due to
better managerial practices which including robust communication mechanism. Premier
Realty Limited offered complimentary services like valuation; survey and consultancy
that support the end to end purchase process which is a clear indication of good
management practices. In conclusion, Premier Realty Limited was committed to offering
quality service to its customers, the customer respondent also confirmed that Premier
Realty Limited used effective communication channels to reach them and it was reported
that the attitude of managers in Premier Realty Limited influenced the extent to which
customers invested in property with them.
5.4.4 Growth of Real Estate
The growth rate of real estate is affected by property prices that are high, customers the
study confirms that the return on investment for the real estate industry is high. The
55
mortgage interest rates may discourage the growth of the real estate industry; even though
there is increase willingness by banks to lend money to client to purchase property. In
conclusion, the study revealed that there was high growth in residential construction,
there was high growth in commercial construction and increased availability of properties
in the market.
5.5 Recommendations
5.5.1 Suggestions for Improvement
Based on the study findings, the following recommendations are made:
5.5.1 Customer related factors on Growth of Real Estate
The growth rate of real estate is affected by property prices that are high, customers the
study confirms that the return on investment for the real estate industry is high. The
mortgage interest rates should be drastically lowered in order to speed the growth of the
real estate industry.
5.5.2 Socio-demographic Factors related to the Growth of Real Estate
Make gender an integral part of property rights and economic development programs, and
ensure meaningful involvement by women in project work planning and implementation
from the beginning and throughout all components. Since socio-demographic
characteristics overall were found to have more significant influence on choice of
neighborhood and choice of location and size of house, the relevant housing,
infrastructure and development control departments within then national government and
the County Government of Nairobi should formulate relevant environmental policy
guidelines for residential areas such as zoning, pollution and development control laws in
view of the fact that households pay more attention to the neighborhood characteristics
and location characteristics influencing the quality of housing.
5.5.3 Managerial Factors/ Practices related to Growth of Real Estate
From the research it is evident that the pool of new customers sits with the already
existing customers. Considering the fast that many customers were willing to refer a new
client to the business, and then Premier Realty Limited should leverage on this and get
new customers who in turn would impact on the growth of the business. Considering that
many of the respondents were happy to invest in the sub urban areas, the business should
56
explore more projects in this location that would meet this client’s needs. Premier realty
limited could consider seeking different funding methods for the clients so as to enable
them buy property. This was because the majority of the clients said that mortgages were
expensive.
5.5.2 Recommendations for Further Research
This research provides other considerations, not due to its limitations, but to the richness
of the information found.
i. This study was carried out at Premier Realty Limited in Nairobi County; a similar
study should be carried in the Counties to establish the similarities and difference
in trend regarding factors affecting the growth of real estate investment companies
in Kenya.
ii. This study forced on one real estate company; a similar study could be carried out
across several real estate companies to establish if the trend is the same.
57
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62
APPENDICES
APPENDIX I: LETTER OF INTRODUCTION
Catherine NkiroteMburugu
Mobile No: 0722720091
Email: [email protected]
4th February2019
Dear Sir, Madam
RE: REQUEST TO PARTICIPATE IN A RESEARCH STUDY
I am Catherine Mburugu, a post graduate student at USIU-Africa. I am carrying out
survey entitled: “FACTORS AFFECTING THE GROWTH OF REAL ESTATE
INVESTMENT COMPANIES IN KENYA: A CASE OF PREMIER REALTY
LIMITED”. To complete the study, I will need to collect relevant information from you. I
am therefore requesting permission to collect and use your information which will be
achieved by using the accompanying questionnaire. Kindly note that any information you
give will be treated with confidentiality and at no instance will it be used for any other
purpose other than this study. Your assistance will be highly appreciated.
Yours truly,
Catherine NkiroteMburugu.
63
APPENDIX II: QUESTIONNAIRE
This questionnaire has statements regarding the FACTORS AFFECTING THE
GROWTH OF REAL ESTATE INVESTMENT COMPANIES IN KENYA: A CASE OF
PREMIER REALTY LIMITED. Kindly take few minutes to complete the questionnaire
as guided. Your responses will be handled confidentially and ethically.
Thank you for agreeing to participate in this academic study.
SECTION A: GENERAL /DEMOGRAPHIC DATA
1. Indicate your Gender Male [ ] Female [ ]
2. State the type of customer you are
a. Customer who purchase land [ ]
b. Customer on whose behalf the company manage their rentals [ ]
c. Customers in the form of agencies [ ]
3. Indicate the age group that best describes your age bracket
Age (Years)
Below 20
Years
21-30
Years
31-40
Years
41-50
Years
51-60
Years
Above 60
Years
Response
4. Your education level
Level of
Education
No
Education
Primary
Level
Secondary
Level
Middle
Colleges
Bachelors
Degree
Post
Graduate
Response
5. How long have you dealt with Premier Realty Limited
Period in
(Years)
Below 1
year
1-5 Years 6-10
Years
11-15
Years
Above 15
Years
Response
64
6. What is your average income per month?
Period in
(Years)
Below
Kshs.
100,000
Kshs.
100,001
–
200,000
Kshs.
200,001
-300,000
Kshs.
300,001-
400,000
Kshs.
400,001-
500,000
Above
Kshs.500,001
Response
SECTION B: Customer Related Factors on Growth of Real Estate
Please indicate by ticking the appropriate box the extent to which you agree or disagree
with each of the statements below regarding customer related factors on growth of real
estate. The following scale is applied for all statements on a scale of 1 – 5, where: 1 =
strongly disagree, 2 = disagree, 3 = neither agree nor disagree, 4 = agree and 5 =
strongly agree. Please indicate with (√) the extent to which you agree that the following:
Statement Strongly
disagree
Disagree Neither
agree or
disagree
Agree Strongly
agree
1 I willagain buy a
second property from
Premier Realty Limited
2 Premier Realty Limited
management are
accessible
3 I would recommend
Premier Realty Limited
to a friend
4 I have benefited from
their installment
payment plan
5 I prefer to buy my
property cash
6 The process of getting a
property from Premier
Realty Limited is
convenient
7 I highly rate Premier
65
Realty Limited
compared to other
players in the market
8 Premier Realty Limited
offer good service
9 The prices of the
properties offered by
Premier Realty Limited
are affordable
10 Information is readily
available at Premier
Realty Limited
11 Staff at Premiere Realty
Limited understand
their products
In your opinion what are the other customer related factors that influence the growth of
real estate?
66
SECTION C: Socio-demographic Factors Affecting the Growth of Real Estate
Please indicate by circling the appropriate box the extent to which you agree or disagree
with each of the statements below regarding socio-demographic factors affecting growth
of real estate. The following scale is applied for all statements on a scale of 1 – 5, where:
1 = strongly disagree, 2 = disagree, 3 = neither agree nor disagree, 4 = agree and 5 =
strongly agree. Please indicate with (√) the extent to which you agree that the following:
Statement Strongly
disagree
Disagree Neither
agree or
disagree
Agree Strongly
agree
1 Location of a property
influences my buying
decision
2 Presence of social
amenities like roads,
electricity and water
influences my buying
decision
3 My
incomesinfluencesmy
property investment
decisions
4 The size of my family
influences my decision
to invest in a property
5 I am willing to purchase
land in sub urban areas
that are slightly out of
town
6 My age did not deter
me from buying my
first property
7 I would like to buy
property near my
friends or colleagues
8 Gender influences
decision to invest in
property
9 I am willing to purchase
a house in the urban
setup only
10 My family participate in
the property buying
decision
67
In your opinion what are the other socio-demographic factors that influence the growth
of real estate?
SECTION D: Managerial Factors/ Practices
Please indicate by circling the appropriate box the extent to which you agree or disagree
with each of the statements below regarding management practices/ factors affecting
growth of real estate. The following scale is applied for all statements on a scale of 1 –
5, where: 1 = strongly disagree, 2 = disagree, 3 = neither agree nor disagree, 4 = agree
and 5 = strongly agree. Please indicate with (√) the extent to which you agree that the
following:
Statement Strongly
disagree
Disagree Neither
agree or
disagree
Agree Strongly
agree
1 Premier Realty
Limited deliver on
their promise
2 Premier Realty
Limited offers
complimentary
services like
valuation, survey and
consultancy that
support the end to end
purchase process
3 Premier Realty
Limited are committed
to offering quality
service to its
customers
4 Premier Realty
Limited use effective
communication
channels to reach me
5 The attitude of
managers in Premier
Realty Limited
influences the extent
68
to which I invest in
property with them
6 Premier Realty
Limitedtailorflexible
solutions to meet my
needs
7 Premier Realty
Limited working
hours are convenient
8 Premier Realty
Limited is one of the
leading Real Estate
Companies in the
industry
9 Premier Realty
Limited has a wide
range of products
10 I am always kept
informed of the new
product offering by
Premier Realty
Limited
In your opinion what are the managerial practices/ factors that influence the growth of
real estate?
69
SECTION E: Growth of Real Estate
Please indicate by circling the appropriate box the extent to which you agree or disagree
with each of the statements below regarding growth of PRL estate. The following scale
is applied for all statements on a scale of 1 – 5, where: 1 = strongly disagree, 2 =
disagree, 3 = neither agree nor disagree, 4 = agree and 5 = strongly agree. Please
indicate with (√) the extent to which you agree that the following:
Statement Strongly
disagree
Disagree Neither
agree or
disagree
Agree Strongly
agree
1 The Property Prices are
high
2 The return on investment
for the real estate
industry is high
3 The Mortgage interest
rates encourages the
growth of the real estate
industry
4 There is increase
willingness by banks to
lend money to client to
purchase property
5 There is high growth in
residential construction
6 There is high growth in
commercial construction
7 There is increased
availability of properties
in the market
8 There is an increase in
property sales
9 There is an increase in
the rental prices in
residential areas
10 There has been an
increase in the interest of
home ownership
THANK YOU
70
APPENDIX III: KREJCIE AND MORGAN (1970) GUIDE FOR SAMPLE SIZES
N S N S N S N S N S
10 10 100 80 280 162 800 260 2800 338
15 14 110 86 290 165 850 265 3000 341
20 19 120 92 300 169 900 269 3500 346
25 24 130 97 320 175 950 274 4000 351
30 28 140 103 340 181 1000 278 4500 354
35 32 150 108 360 186 1100 285 5000 357
40 36 160 113 380 191 1200 291 6000 361
45 40 170 118 400 196 1300 297 7000 364
50 44 180 123 420 201 1400 302 8000 367
55 48 190 127 440 205 1500 306 9000 368
60 52 200 132 460 210 1600 310 10000 370
65 56 210 136 480 214 1700 313 15000 375
70 59 220 140 500 217 1800 317 20000 377
75 63 230 144 550 226 1900 320 30000 379
80 66 240 148 600 234 2000 322 40000 380
85 70 250 152 650 242 2200 327 50000 381
90 73 260 155 700 248 2400 331 75000 382
95 76 270 159 750 254 2600 335 100000 384
N = Population Size
S = Sample Size