Abstract
Having a stable and high level of economic growth within a country is associated with numerous benefits to the citizens. In developing countries such as Kenya, the rate of economic growth has been low and always below the projected rate each year. In developed countries such as Germany, Japan, and Iceland, development in the real estate sector and investment in human capital have been identified as probable boosters of economic growth. In Kenya, many of the studies done to investigate some of the boosters of economic growth have only been restricted to specific counties thus covering a small scope in terms of geographical area. Therefore, this study assessed the macroeconomic determinants of real estate development and evaluated the effect of real estate sector development and investment in human capital on economic growth in Kenya using secondary time-series quarterly data spanning from the year 2009Q1 to 2019Q4. The study adopted the neoclassical growth theory, the endogenous growth model, and the human capital theory. To achieve the objectives, the study was guided by a causal-research design. Data for the study variables were extracted from the Kenya National Bureau of Statistics and the Central Bank of Kenya. The study utilized an autoregressive distributed lag (ARDL) model for the analysis. Study results revealed that economic growth, central bank rate, and inflation play a key role in enhancing the development of the real estate sector in the long run. The study also established a long-run relationship between real estate development, inflation, the central bank rate, and economic growth. Specifically, in the long run, the study established that inflation and the central bank rate were negatively and significantly associated with economic growth. This study makes significant progress in providing empirical evidence on the effect of real estate development, human capital, the central bank rate, and inflation on economic growth in Kenya. These findings are useful to government policymakers, academicians, and investors in the real estate and education sector. Additionally, the findings enrich the existing theoretical and empirical literature on the real estate sector and human capital. This study recommends strengthening policies by government policymakers to encourage investment in the real estate sector and control lending interest rates, and inflation rates, as they are crucial for the growth of many economies not only in Kenya but also in other developing countries.