Monthly Archives: February 2012

Return on investment ROI: Measure of Profitability and Risk in Real Estate Investment

Commercial PropertiesReturn on investment is a measure of profitability of the investment. Return on investment is also a measure of the risk in the investment. Real estate is a low risk investment with modest return on investment. Higher returns are associated with riskier investments as investors tend to demand higher returns for assuming higher risk. Investment risks include risk of total or partial loss of the capital or income. Investors therefore prefer shorter periods of risk and seek higher returns. The higher the return on investment therefore, the higher the risk assumed. Read more »

High Interest Rates Hurt Real Estate Investment

Apartment under constructionHigh interest rates in Kenya is hurting real estate investment. Interest is a cost to the developer of real estate as it is to the end buyer. Since October 2011 the Central Bank of Kenya (CBK) has increase the Central Bank Rate (CBR) from 7% to 18% in an effort to tame runaway inflation and stabilise the weakening shilling. Consequently commercial banks have increased their lending rates from low figures of 11% to about 25%.

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