Savings and Credit Co-operative Societies as investment vehicles to enhancing affordable housing: a case of Kenyan SACCOs
Wambui, David Nyaga
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The study seeks to explore whether SACCOs can profitably invest in affordable housing through special-purpose investment vehicles such as REITs. The ultimate goal is to increase the domestic funding of the affordable housing agenda. To carry out the study, we built a hypothetical portfolio for the SACCOs using three asset classes namely: Treasury Bonds, Treasury Bills, and seven stocks from the Nairobi Securities Exchange with the best Sharpe ratio and calculated the expected return and standard deviation of that portfolio. We then added real estate (REITs) as the fourth asset class and calculated the expected return and standard deviation of the portfolio and compared the results. From the research, we find that though SACCOs can reduce the housing finance deficit as evidenced by their huge asset base, it is not profitable for them to invest in housing through REITs as this declines their portfolio return. However, these results do not bar them from investing directly in housing since they can offer housing loans to their members in their bid to provide affordable housing and in return earn interests from those loans.