Performance of Real Estate Companies in Nairobi City County, Kenya: The Paradoxical Effects of Risk Management Strategies

Stanley KitatiNgui^1, and Dr. Janet Muthimi¹

¹Department of Business Administration, Kenyatta University

Cite this paper:
Stanley KitatiNgui and Dr. Janet Muthimi. Performance of Real Estate Companies in Nairobi City County, Kenya: The Paradoxical Effects of Risk Management Strategies. Journal of Business and Management Sciences. 2025; 13(4):132-143. doi: 10.12691/jbms-13-4-6

Abstract

Inadequate application of risk management strategies typically results in poor performance of real estate projects. The dismal risk management contributes to cost overruns, project delays, and substandard construction quality all factors that undermine investor confidence and threaten the overall sustainability of the real estate sector. The achievement of real estate projects often falls short due to insufficient application of risk management practices. Although numerous established methods and tools exist for managing risks in large-scale projects, the real estate sector faces unique challenges. Notably, the widespread development of properties on disputed land presents substantial risks to both buyers and investors. In Nairobi City, approximately 30% of property transactions involve unresolved legal disputes. This research aimed to explore how risk management strategies affected the performance of selected real estate companies within Nairobi City County, Kenya. Specifically, it sought to evaluate the impact of risk identification, risk assessment, risk mitigation, and risk monitoring on company performance. The research was grounded in Prospect Theory, Contingency Theory, and Control Theory. A descriptive research design was employed. The population comprised 149 registered real estate firms operating in Nairobi City County. The unit of analysis was the companies themselves, while the unit of observation was one project manager from each organization. The target sample size was 109 participants, chosen through simple random sampling. Primary data collection was conducted using structured questionnaires. An initial pretest involved 11 participants representing approximately 10% of the sample to ensure instrument validity. Expert review and content validation were used to verify validity, and Cronbach's Alpha was utilized to evaluate dependability, with an internal consistency requirement of at least 0.7. The primary analysis did not use data from the pilot test. The research utilized SPSS version 26 to analyze the quantitative data in descriptive and inferential statistics. The results were exhibited through tables and figures to enhance clarity and comprehension. The study found that the performance of real estate firms in Nairobi City County is greatly impacted by risk management techniques, including risk identification, risk assessment, risk reduction, and risk monitoring. According to descriptive data, participants strongly agreed that these tactics are commonly used, with risk identification and mitigation receiving the highest mean scores. All four tactics have a statistically significant beneficial effect on organizational performance, according to correlation and regression analysis, with risk identification showing up as the best predictor. These findings highlight the strategic value of proactive and organized risk management techniques in raising project completion rates, financial success, and competitiveness. The study recommends institutionalizing formal risk identification systems, adopting adaptive assessment tools, operationalizing mitigation plans with adequate resources, and digitizing monitoring systems to promote sustainable performance in the real estate sector.

Keywords:
Risk management strategies Risk identification Risk assessment Risk mitigation Risk monitoring Performance Real estates

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