Land vs. REITs: Why Modern Investors Are Trading Title Deeds for Dividends
For decades, the “Kenyan Dream” has been defined by one image: holding a Title Deed. We are culturally wired to believe that real wealth is something you can walk on, fence off, and point to. The standard advice has always been, “Buy land, they aren’t making any more of it.”
But in 2025, the rules of the game are changing.
While land remains a solid asset, a new wave of modern investors is trading the dusty struggle of land ownership for the sleek efficiency of Real Estate Investment Trusts (REITs). They are swapping title deeds for dividends, and “waiting for appreciation” for instant cash flow.
If you’ve ever wondered how to own a piece of a billion-shilling mall or a student housing complex without taking a bank loan, this guide is for you.
What Exactly is a REIT? (The “Chama” Analogy)
Think of a REIT (Real Estate Investment Trust) as a giant, regulated “Chama” for real estate.
Instead of you buying one small plot in Kitengela for KSh 2 million, you pool that money with thousands of other investors. A professional fund manager then uses that massive pool of cash to build or buy high-value assets—like shopping malls, office blocks in Westlands, or student hostels (Qwetus).
You don’t own the physical building directly. Instead, you own units (shares) of the trust. As the building collects rent, that money is shared out to you and other “members” as dividends.
There are two main types you need to know:
- I-REITs (Income REITs): These own finished properties that are already collecting rent. Their main goal is to pay you regular income (dividends).
- D-REITs (Development REITs): These pool money to build properties. The goal here is capital appreciation (selling the finished project for a profit).
The Head-to-Head: Land Banking vs. REITs
Let’s compare the traditional method (buying a plot) against the modern method (buying REITs).
| Feature | Traditional Land Banking | Investing in REITs |
| Entry Cost | High. You need millions for a decent plot in a good area. | Low. You can start with as little as KSh 5,000 (e.g., via Vuka). |
| Liquidity | Low. Selling land can take months or years. You can’t sell “just a corner” if you need quick cash. | High. You can sell your units on the NSE or platforms like Vuka instantly, just like selling shares. |
| Income | Zero. Vacant land pays you nothing. In fact, it costs you money (rates, fencing, security). | Regular. I-REITs are required by law to distribute at least 80% of their income as dividends. |
| Hassle Factor | High. You deal with title processing, squatters, fencing, and land rates. | Zero. Professional managers handle tenants, maintenance, and legal compliance. You just check your bank balance. |
| Taxation | Heavy. Capital Gains Tax (15%) + Stamp Duty (2-4%) + Legal Fees. | Tax Efficient. REIT dividends have a final withholding tax of just 5%. They are exempt from income tax. |
The “Secret Weapon”: The Tax Advantage
This is the point most investors miss. The Kenyan government wants you to invest in REITs, so they have given them a massive tax break.
- Rental Income: If you own a rental apartment, you pay tax on rent (either 7.5% or 30%).
- REIT Dividends: You only pay a 5% withholding tax. That is it.
- Capital Gains: When you sell your REIT shares at a profit, that gain is Tax-Exempt in Kenya. When you sell land, you pay 15% Capital Gains Tax.
Who Are the Big Players? (The Issuers)
You can’t just buy a REIT from anyone. In Kenya, there are a few regulated heavyweights:
1. Acorn Holdings (The Student Housing Kings)
- What they own: The massive “Qwetu” and “Qejani” student hostels you see around Nairobi universities.
- The Investment: They have both an I-REIT (for income) and a D-REIT (for development).
- How to buy: They have revolutionized this with the Vuka platform. You can sign up online and start investing with relatively small amounts.
2. ILAM Fahari I-REIT (The Pioneer)
- What they own: Commercial properties like Greenspan Mall.
- The Investment: This is an I-REIT focused on rental income.
- How to buy: Previously listed on the main investment market segment, they are now on the Unquoted Securities Platform (USP) of the NSE. You typically buy these through a licensed stockbroker.
3. LAPTRUST Imara I-REIT
- What they own: A mix of commercial and residential assets (e.g., CPF House, Metro Park).
- Status: Currently a “Restricted” I-REIT, meaning it is mostly targeted at high-net-worth and institutional investors (like pension funds), not the average “Wanjiku” just yet.
Conclusion: Should You Sell Your Land?
Not necessarily. Land is excellent for control and legacy. It is a tangible asset that you can pass down to your children.
However, if you are looking for cash flow, liquidity, and freedom from stress, REITs are the superior vehicle. The modern investor doesn’t choose one or the other—they diversify. They keep the family land for heritage, but they build their monthly income through REITs.
Don’t just sit on dead capital. Make your real estate work for you.