Investment return and its influence on private investment in rental houses :

Abstract

Demand for residential real estate market in Tanzania particularly in emerging cities like Dodoma is exhibited to exceed supply side whereby generally there is at least 3 million housing deficits. Despite the government policies and regulations to endorse developments to minimize housing shortage in Dodoma city, still private real estate investors do not take a full chance invest in rental housings where there is ready made market to increase returns. This article aims to examine how expected rent, development cost and operating costs determine the private investment rental housing in Dodoma city. Using mixed research approach, data were analyzed using MS Excel and SPSS-26. A total of 164 questionnaires were distributed and only 114 questionnaires equivalent to 70% were correctly filled and handed over to the researcher. 87(76.32%) were individual investors, 27(23.68%) were private companies and 0 other investors. For qualitative data, 10 key informants were interviewed. It was found that expected rent significantly changes number of houses by only 10.1% however not adequate. Therefore, it holds that rent rates in Dodoma city low rents discourages investments. Operating costs and development cost holds a massive negative and significant influence on changes in number of houses invested by 10.3% and 43.0% respectively this indicates that, the problem of housing shortage despite high demand of houses in Dodoma city is geared by the development and operating costs at large. The study recommends that influence investment in private houses, government should temperately control the market for rental housing, unlocking the development costs issues via reducing development operating costs can increase rents profits to investors, also, society and government will be benefitting housing shortage reduction.