Optiven Group Chief Executive, George Wachiuri, has lauded the move by the Central Bank of Kenya on real estate investment trusts REITS. His sentiments follow a move by The Treasury to reverse its decision to charge Value Added Tax (VAT) on asset transfers into Real Estate Investment Trusts (Reits). The same will now also apply to asset backed securities, boosting the prospects of the two alternative financing plans that have failed to gain much traction in recent years.
The government in 2020 reinstated the VAT charge on the transfers in amendments to the VAT Act contained in the Tax Laws Amendment Act 2020. The development then was seen to slow down the uptake of Reits in Kenya. In his budget speech last this year, Treasury Cabinet Secretary Ukur Yatani announced the removal of the tax charge.
Yatani said, ” these vehicles are key in financing real estate investments at a time when the sector has found it harder to access credit from ordinary channels. In order to entrench the benefit of affordable housing including specialised facilities like student hostels, it is imperative to develop innovative financing alternatives,”.
Wachiuri whose group of companies has a growing interest in construction is keen to dig in. Already the company is in Partnership with NCBA as it seeks to encourage investors to build and buy. Optiven is currently at the Nairobi Securities Exchange IBUKA program as it works to join the trading floor.
“We are excited to receive a government nod towards investing in the NSE and can only look forward to a successful engagement as players in real estate” Wachiuri adds. https://www.optiven.co.ke/newsblogs/inclusion-of-stakeholders-as-optiven-moves-to-ibuka/ Through it’s real estate arm, Optiven has in the last two years upscaled its portfolio and scaled up it’s value additions across the project.
The company through it’s GoGreen Initiative has further increased momentum in Environmental Sustainability by embracing green living on it’s projects. Through the Initiative, Optiven in Partnership with Nation Media is now set to host the GoGreen Awards 2021. It is during the awards that Optiven will bestow awards to sustainability champions across the spectrum. https://www.optivenfoundation.org/news-and-blogs/optiven-foundation-launches-awards-with-pomp-and-color/
“In this regard, I propose to exempt from VAT asset transfer into the Real Estate Investment Trusts and Asset Backed Securities.” Student hostel developer Acorn Holdings has already issued Reits for its hostels in Nairobi, whose under-subscription showed that there is still lukewarm enthusiasm for the emerging investment vehicles hence the calls for incentives
