THE ASSESSMENT OF THE STRUCTURE AND PERFORMANCE OF THE LISTED PROPERTY MARKETS IN BOTSWANA FOR INTRODUCTION OF REITS

Loyd Sungirirai and Abba Sungirirai

AfRES from African Real Estate Society (AfRES)

Abstract: The objectives of this research are to examine the performance of the listed real estate assets in the investment market and assess the readiness of the Botswana real estate market for REITs. As the securitization of real estate expands, more and more securitised products are being introduced, in the developing economies. The most topical and current being REITs. The limited nature of participating in securitised real estate is a major cause for concern which needs to be addressed once and for all. A quantitative methodology is used to analyse the performance of indirect real estate by picking the Variable Loan Stock Companies (VLSs) in Botswana Stock Exchange. The returns of the property listed companies are going to be used in order to determine whether the VLSs yield high or low returns. An analysis of the listed property shows that the listed property (VLSs) have positive Sharpe ratio which is 3.506. The results suggest that the property Variable Loan Stock companies provide better returns given the level of risk associated with investing in the companies. The ostensible perception shown from the responses to the study is that stakeholders in the Botswana listed property market are in favour of the REIT legislation and that it is suitable and welcomed introduction. There is a notable group that are indifferent and don’t believe that the REIT legislation will lead to a more liquid and efficient property market. The literature review generally supported the view that the REIT legislation where it has been introduced in many countries was to eliminate some of the problems of the listed property companies, by providing more stringent regulatory requirements and uplifting the property market to a level that is internationally competitive.

Keywords: Botswana; listed property; Performance; Property Market; REITs; Variable Loan Stocks (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2019-09-01
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