Debt financing and the increasing real estate pricing with a case study of Nansana municipality.

Abstract

There has been an ever-growing demand for housing in Uganda. Though this may spell booming business for real estate financing investments, this has not been the case, at least in relation to financial performance. The study examined the effect of interest rates on financial performance of real estate investment firms, determine the effect of private asset financing loan uptake on financial performance of real estate investment firms and to the effect of asset-to-loan ratio on financial performance of real estate investment firms in Nansana Municipality. The study was guided by several pertinent literature reviews. The study population consisted of 126 real estate developers (real estate investment firms). A questionnaire was used to facilitate data collection. The Statistical Package for Social Sciences Version 24.0 programme was used in data analysis. Data analysis involved both descriptive and inferential statistics. The results of the analysis were presented in tables. The study concluded that there were a number of crucial factors that determined the interest rates charged on private asset financing loans and that the ratio of assets to loans influenced financial risk of real estate investment firms in Nansana town. It is recommended that the real estate investment firms should come up with a category of loan facility skewed to women borrowers, in order to encourage them to increase their borrowings and that real estate investment firms should put more emphasis on the type, amount and value of collateral used to secure private asset financing loans.