Factors influencing venture capital financing of real estate development in Ghana

Finance is the bedrock of real estate development. Its availability and accessibility are important for a successful investment. In most cases, investors don’t have substantial finance to execute a project; instead, they resort to an external source through mortgage financing. However, there are difficulties in accessing mortgage finance particularly due to borrower’s default, thereby hindering finance accessibility. This study investigates factors determining mortgage finance accessibility for providing real estate projects in Lagos State, Nigeria. The target populations are the Primary Mortgage Institutions and Real Estate Developers in Lagos State. The collected data were analysed using factor analysis and Mann-Whitney U test. The study revealed that income, nature of the occupation, type of collateral, years of the banking relationship, loan duration and loan sector are the major determinants of access to mortgage finance. These factors must be succinctly considered to ensure ease of access, adequate provision and utilisation for real estate development. Keywords: Collateral, determinants, finance, investors, mortgage.

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Assessing the Potential of Real Estate Investment Trust in Financing Real Estate Development Projects

International Journal of Science and Management Studies (IJSMS) ◽

10.51386/25815946/ijsms-v4i5p118 ◽

2021 ◽

pp. 219-237

Author(s):

Philips Nnajiofor Egbo ◽

Obinna Collins Nnamani ◽

Amaka Amanda Amuta

Keyword(s):

Real Estate ◽

Securities And Exchange Commission ◽

Equity Capital ◽

External Factors ◽

Real Estate Development ◽

Development Projects ◽

Viable Option ◽

Staff Members ◽

Factors Influencing ◽

High Level

One of the crucial challenges facing real estate development in Nigeria is finance. The informal sources of finance are grossly inadequate, and access to formal finance instruments is difficult. This study aimed at investigating the potential of REIT structure as an option for financing real estate development in Nigeria. The specific objectives of the study were to; evaluate the external factors influencing the performance, future growth and development of N-REITs as it affects funding of real estate development projects; and appraise the future prospects of N-REITs as a viable option in financing real estate development projects. A survey research design was adopted for the study. A sample of 275 stakeholders comprising 221 real estate developers, and 54 senior staff members of Securities and Exchange Commission (SEC), all in Abuja, were conveniently selected for the study. Frequency, percentage, mean, and standard deviation were used to analyse the data. Findings show that equity capital (47.8%), commercial banks (26.2%), and mortgage banks (16.5%) are the major sources of real estate development finance in Nigeria. The key external factors influencing N-REITs performance were strategic property locations (4.43 ± 0.82), tax treatment (4.34 ± 0.78), and political risks (4.10 ± 1.12); while the most important prospects of N-REITs in financing real estate development projects include; increase in supply of real properties (4.1 ± 1.02), portfolio diversification (3.88 ± 1.10), and liquidity in real estate sector (3.69 ± 1.22). The study concludes that, in implementing high level sensitisation, transparency, infrastructure provision and review of regulations guiding REIT’s operation, N-REIT most probably becomes a viable option for financing real estate development.

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THE EFFECT OF FINANCING SOURCES ON REAL ESTATE DEVELOPMENT IN KENYA

International Journal of Finance and Accounting ◽

10.47604/ijfa.297 ◽

2017 ◽

Vol 2 (2) ◽

pp. 43

Author(s):

Joseph Mwathi ◽

Dr. James M Karanja

Keyword(s):

Social Sciences ◽

Real Estate ◽

Venture Capital ◽

Survey Design ◽

Secondary Data ◽

The Real ◽

The Real Estate ◽

Capital Financing ◽

Internal And External Factors ◽

Descriptive Survey

Purpose: The purpose of this study was to establish the sources of financing real estate in Kenya. In specific terms the study reviewed whether financing in the real estate originates from; mortgage financing, savings, venture capital and equity financing.Materials and methods: This study employed descriptive survey design. The population of this study was all the real estate firms in Nairobi. This study used secondary data for five years. Data was analyzed using Statistical Package for Social Sciences (SPSS) and results were presented in frequency tables and charts. The data was then analyzed in terms of descriptive statistics like frequencies, means and percentages.Results: The findings indicated that mortgage financing is the most used source of financing, with equity and venture capital being the least source of financing used. The findings also indicated that there is a significantly positive relationship between mortgage financing and real estate development.Recommendations: The study recommended that to increase use of equity and venture capital as a source of financing will require businesses to sell their ideas to people who have money to invest. Equity and venture capital financing can be a good source of financing but with combining them with other sources of financing. Further research should be on the effects of sources of financing in unsuitable economic conditions, political instability and a global economic crisis and internal and external factors that affect the decision on sources of financing for real estate firms in Kenya.

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