The Capital Markets Authority (CMA) proposed lowering the minimum investment amount that professional investors can put into limited real estate investment trusts (REITs) from Sh5 million per person to Sh10,000 in order to increase interest in the investment vehicle.

The markets regulator has proposed lowering the threshold in order to encourage REIT participation in the government’s affordable housing initiative.

To be considered a professional investor in a development REIT or restricted income REIT, you must currently have a minimum investment of Sh5 million. Investors can, however, invest in unconstrained income REITs with no minimum investment restriction.

In its annual policy memorandum to the Cabinet Secretary for National Treasury and Economic Planning in December 2022, CMA Kenya proactively proposed lowering the minimum subscription to REITs by investors from Sh5 million to Sh10,000 and extending stamp duty on asset transfers into REITs as policy incentives to support REITs.

In March 2023, the budget team met with CMA Kenya to discuss the proposals. While development REITs are primarily engaged in the development and construction of properties for sale or rental, income REITs derive the majority of its earnings from real estate rentals.

Reduced investor subscription requirements are expected to increase participation from retail investors and disperse concentration from a select group of well-capitalized organizations, including banks, underwriters, pension or retirement funds, collective investment schemes, and pension or retirement funds.

Acorn Holdings Limited, a real estate developer, issued restricted income and development Reits for student housing construction in 2021; however, these trade on the over-the-counter (OTC) market rather than being listed.