Vuka Is The New Way To Invest In Real Estate With Ksh 5,000

5,000 shillings is not that much. With the current economy in Kenya, skyrocketing inflation and the high cost of doing business, Ksh 5,000 might not yield much if you started a business.

But what if that Ksh 5,000 could be invested in property and, within a decade, grow to tens of thousands? Sounds like fiction? No, it is indeed a fact.

The potential to turn Ksh 5,000 into tens of thousands is now possible after Vuka, Kenya’s first regulated investment platform that gives retail investors the opportunity to invest in Real Estate Investment Trusts (REITs) from as low as Ksh 5,000.

This means that with Ksh 5,000, investors have the option of buying into REITs, the Acorn Student Accommodation Income REIT (ASA I-RET) and its equivalent, ASA Development REIT.

So how does your Ksh 5,000 grow?

Simple, if you invest Ksh 5,000 per month in the two ASA REITs it translates to Ksh 60,000 per year, and assuming that this grows at 7% per annum, in 10 years, you and your family will have something to fall back.

We set the rate at 7% because it’s one point higher than the Central Bank of Kenya’s 5% inflation target. And Vuka, actually, offers this.

Why does this matter?

The 5% target acts as a benchmark, meaning any smart investment should aim to deliver returns above it to truly grow your money.

Fortunately for Vuka investors, these targets are achievable because the REITs are designed to outpace the rate of inflation, and they have the rent escalation feature. For example, the respective hostels or purpose-Built Student Accommodation (PBSA) were able to increase rents in 2024 and thereby outpace the rate of inflation, outpacing the CBK’s rate of inflation target.

The ASAI REIT rental escalation averaged 5.4% compared in 2024, above the 5.2% average inflation rate in Kenya recorded in the same year and above the CBK’s 5% target. The rental escalation enabled the ASA I-REIT to hedge against inflation.

Additionally, the low entry point makes the units more liquid, meaning it’s easier to find a buyer if you need to sell. And when you factor in both annual property price increases and dividends, the overall returns are well-positioned to beat inflation.

This assumes no unforeseen major events, like an earthquake or a global economic collapse. It’s important to remember that all investments carry some risk.