CMA targets wider retail participation in Kenya's property market with proposed KSh100,000 REIT investment minimum
The Capital Markets Authority (CMA) is proposing to reduce the minimum investment required in Kenya’s regulated real estate investment trusts (REITs) from KSh5 million to KSh100,000, in a move aimed at widening participation in property investment and deepening the country’s capital markets.
The proposed 98% reduction would lower the financial barrier that has historically restricted participation in certain REIT structures to wealthy and sophisticated investors. CMA says the KSh5 million minimum was introduced in 2013, when Kenya launched REITs, to ensure that investors entering the market understood the risks associated with the investment vehicles.
“The reduction to Sh100,000 is a progressive move to democratise real estate investment and deepen the capital markets,” the regulator said in a report outlining its recommendations. CMA added that the previous investment requirement had made participation challenging because of the amount involved.
REITs allow property developers to raise money from investors to finance developments or unlock the value of existing properties by selling investment rights linked to rental income. Income REITs (I-REITs) hold income-generating properties and distribute returns to investors, while Development REITs (D-REITs) raise capital to finance new property projects.
The proposed reduction follows an earlier attempt by CMA to lower the entry threshold. Three years ago, the regulator recommended reducing the minimum investment to KSh10,000, but the proposal was not backed by the necessary amendment to the law.
The existing framework also provides for unrestricted income REITs, which do not have a regulatory minimum investment amount. The latest proposal therefore forms part of a wider review of the investment requirements governing Kenya’s REIT market.
New ownership rules could give institutional investors more room
Beyond lowering the investment threshold, CMA wants to reduce the minimum proportion of a REIT that must be held by the public from 25% to 15%. The proposed change is intended to give large investors, including pension funds and insurance companies, greater flexibility to retain substantial ownership stakes in property investment vehicles.
The regulator says the existing ownership requirement can force institutional investors to sell portions of their holdings simply to comply with public ownership rules, even when they have no intention of exiting their investments.
“If a few large investors already own most of the Reit, they are forced to adjust, they may have to sell part of their investment to the public, even if they don’t want to; not because they need money but just to meet the rule resulting to dilution of ownership and weaker decision making,” CMA said.
The proposal addresses an issue previously raised by industry participants seeking changes to Kenya’s REIT framework. In September, TechTrends reported on calls by Mboya Wangong’u & Waiyaki Advocates partner Peter Waiyaki to modernise the regulations, including reviewing public shareholding requirements and expanding the range of assets eligible for REIT investment.
Reducing the public ownership requirement to 15% could make it easier for institutional investors to maintain larger positions in property assets while giving REIT issuers more flexibility when structuring their offerings. However, the proportion of units available to public investors also has implications for trading activity and liquidity on the Nairobi Securities Exchange (NSE).
Lower conversion fees and loan guarantees target property financing
CMA is also proposing to standardise the fees charged when converting one type of REIT into another at KSh150,000. The change would substantially reduce the cost for issuers, with conversions from a Development REIT to an Income REIT previously costing as much as KSh7.5 million.
The conversion process allows a property investment vehicle to change its structure as a project progresses from development into an operational asset generating rental income. A developer can initially raise capital through a D-REIT to finance construction before transitioning to an I-REIT once the property is completed and generating income.
Lower conversion costs could make this process more affordable for property developers and REIT managers, providing greater flexibility in how they structure investments and manage completed developments.
The regulator is also proposing to allow REIT managers to guarantee loans taken by associated projects or special-purpose vehicles (SPVs). CMA says the arrangement would improve access to financing because lenders are more willing to extend credit when a loan is supported by a guarantee.
The proposed changes form part of a broader effort to strengthen the role of REITs in mobilising private capital for property development, including projects linked to the government’s affordable housing agenda.
The financing proposals also reflect the wider role institutional investors and private capital can play in funding long-term assets. Kenya’s pension industry, which holds substantial domestic savings, has been identified as a potential source of capital for infrastructure and property investment, although pension funds must balance investment returns against liquidity requirements and their obligations to members.
Oversubscribed REIT offers point to investor appetite
The proposed regulatory changes come after two REIT offers attracted more subscriptions than their initial targets, providing evidence of investor demand for property-backed investment products.
ALP Investment REIT’s initial public offering recorded a 115% subscription rate, while TRIFIC Green I-REIT attracted subscriptions equivalent to 103.3% of its offer, according to CMA.
The two offers add to activity in Kenya’s REIT market, where three vehicles are currently trading at the Nairobi Securities Exchange, two of them denominated in US dollars.
TechTrends’ earlier coverage of the market has also documented the growth of specialised investment products in Kenya. Collective investment schemes had accumulated KSh948.7 billion in assets under management by June 2026, reflecting the scale of the country’s pooled investment market and the growing range of products available to investors.
The expansion of investment options beyond traditional money market funds provides an opportunity for REITs to attract investors seeking exposure to income-generating property without having to purchase and manage buildings themselves.
For property developers, the proposed changes could make REITs a more flexible route for raising capital, financing construction and managing completed assets. For individual investors, the lower entry threshold would open the door to participation in a market that has historically required substantial investment commitments.
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