INFLUENCE OF ENTREPRENEURSHIP ON GROWTH OF COMMERCIAL REAL ESTATES IN MACHAKOS COUNTY
Purpose of the Study: The purpose of the study was to establish the influence of entrepreneurship on the growth of commercial real estate in Machakos County.
Statement of the Problem:Demand for housing units continues to outstrip the supply; property developers in Kenya have in the recent years considerably scaled down their construction activities, pointing to a struggling property sector. In 2018 the real estate sector in Kenya recorded its slowest annual growth in four years, giving weight to property market reports that signaled a slump in demand despite increased supply of new housing units. Agency theory was used to inform this study.
Research Methodology: The study adopted a cross-sectional survey research design. The target population for this study was made up of 374 registered property developers with Kenya Property Developers Association operating in Machakos County.The study used census approach to study all the 374 registered property developers. Prior to commencement of the actual study, 40 respondents from Kajiado, a neighboring county to Machakos was used in a pilot study to pre-test the research instrument. The researcher triangulated both structured questionnaires and open ended interview guide to gather and saturate data from the respondents. While the interview guides were bent to gather in-depth qualitative data from the real estate agents, the structured questionnaire was used to collect quantitative data from the respondents who develop the real estates. Both quantitative/ numerical data and qualitative/ descriptive data were collected using structured questionnaire and unstructured interview guide respectively. Qualitative data was analyzed using descriptive statistics while quantitative data was analyzed using inferential statistics. Time series was also be utilized in this study. Statistical Packages for Social Sciences (SPSS) software was used for higher statistical computations.
Results: The findings revealed a positive and significant relationship between entrepreneurship and the growth of commercial real estate in Machakos County (β =0.329, p=0.000).
Conclusion: On the basis of the findings, it was concluded the risk-averse investors or those with low risk bearing ability should choose the real estate markets where prices are less volatile, in order to pursue the long-term commercial real estate investment value with a lower risk. The risk-lover investors or those with greater risk tolerance can consider more volatile markets in order to realize the benefit maximization. Investors concern the factors influencing house price fluctuations, such as leverage, investment demand ratio, etc., as these factors change, price volatility could change correspondingly.
Recommendation: The study therefore recommended that real estate property management involves understanding of operating expenses and budgeting; from this information, appropriate rental rates are set balanced by the current market and what it will support in the way of rents. A firm knowledge of the area and competitive rental properties is hence required. The property manager may recommend marketing programs, special promotions and other advertising strategies to the owner in order to maximize occupancy and rental rates.
Keywords: Entrepreneurship, Commercial, Real estate, Growth, Machakos, County
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