Real Estate Investments and Firm Value of Investment Companies Listed at the Nairobi Securities Exchange

Joan Wangechi Kamuru; Gordon Ochere Opuodho

doi:10.37284/ijfa.4.1.3037

Joan Wangechi Kamuru Jomo Kenyatta University of Agriculture and Technology
Gordon Ochere Opuodho, PhD Jomo Kenyatta University of Agriculture and Technology

DOI: https://doi.org/10.37284/ijfa.4.1.3037

Keywords: Investment Companies, Real Estate, Firm Value, Nairobi Securities Exchange, Portfolio

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Abstract

Investment companies are a critical drive for wealth generation, however, in Kenya, these companies have been experiencing a decline in their firm value. For instance, as of May 2023, Centum Investment Co. Ltd’s market capitalization was at KES 5.34 billion, whereas in 2020 market capitalization was at KES 15.006 billion. Based on the declining market capitalization rate and limited research, this study sought to investigate how real estate investments affect firm value of investment firms listed at the Nairobi Securities Exchange. The modern portfolio and resource-based view provided anchorage for this study. A longitudinal study technique and a quantitative research design were adopted targeting five listed investment firms at the Nairobi Securities Exchange. A panel regression model was used. Firm value was significantly impacted by real estate investments, suggesting that a unit rise in the value of real estate assets resulted in a unit increase in company value. Therefore, investment companies in Kenya can maximize their firms’ value through successful real estate investments. It was recommended that investment companies should adopt investment strategies that are geared towards investment in real estate assets. Future research should focus on capturing data from all investment firms in Kenya, to enhance the generalizability of data

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