FACTORS AFFECTING THE GROWTH OF REAL ESTATE …

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

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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

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

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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

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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

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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

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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

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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

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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

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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

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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-

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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.

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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

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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

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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

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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).

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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)

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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.

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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.

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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.

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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