Financial Risk Management As A Tool For Improving Financial Performance In Real Estate Investment In Nairobi County

Abstract

The study is an assessment of the financial risk management as a tool for improving financial performance in real estate investment in Nairobi County. The study intended to use descriptive survey design. The population of the study was all 151 real estate firms. The unit of analysis is the real estate managers of Nairobi Count. A sample of 110 firms was taken. The study used primary data which was collected through use of a questionnaire. Data analysis was conducted using descriptive and inferential statistics. The specific descriptive statistics used were mean scores and frequencies. The particular inferential statistics used was regression analysis. The data was then analysed using STATA. This research set out to find out whether financial management can be as a tool for improving Financial Risk Management in real estate in Kenya. The study has found out that financial risks are present in real estate and the same pose serious challenges to real estate managers and investors. The study has also found out that the risk management measures that the managers in the industry are using are not adequate given the significant losses that are suffered by the real estate managers and investors conducting business within this market. The study has found out that players within the industry are in agreement that effective risk management in real estate can increase profitability, increase operational efficiency and effectiveness and enlarge market share all of which can lead to financial performance. There is therefore need to consider adopting other risk management measures such as operational hedging and financial hedging that could assist managers in real estate minimize the losses suffered attributable to risks. There is need to carry out an in depth analysis that will help real estate managers identify all the risk facing them in real estate. There may be a need therefore to have further researchers investigate this variance and investigate how prepared real estate managers are in managing foreign exchange risk in the real estate market. Future researchers could also investigate the reasons behind real estate investment and the fundamentals that guide such investment. With a moderate risk attitude attributed to Kenyan property investors and their managers, it would be interesting to know what fundamentals drives real investment in Kenya given that risk is of little concern