Agency theory is basically concerned with the conflicts of interest arising in agency relationships and how to align them. Whereas all common forms of investment activities are subject to agency conflicts, property investment owing to its idiosyncratic features is more vulnerable to the conflicts. The objective of this study is twofold i.e. to test the robustness of agency theory in explaining cases of sub-optimal property investment decisions, and to examine the effectiveness of informal institutions in mitigating agency conflicts in property investment activities in property market settings which are characterised by weak formal market institutions. In particular, the study investigates agency relationships existing in property investment activities of pension funds and foreign investors in Tanzania. Tanzania is a typical reforming infant market of Africa with nascent formal market economy institutions. The study is mainly based on a survey of key agents and principals in the property investment activities of pension funds and foreign investors. A qualitative study was used as a forerunner to the survey. The data for the qualitative component were collected using focus group interviews and in-depth interviews. Preliminary findings show pervasive agency problems in the property investment activities. It is however also clear from the findings of the study that informal institutions play a key role in mitigating the opportunistic behaviour of agents. Age and marital status are other key factors in constraining agentsí behaviour. However, there is no conclusive evidence to suggest that agentís level of income and education are important factors in mitigating agency conflicts. These preliminary findings provide useful contribution to the development of the agent theory. They provide more compelling evidence in making a case for inclusion of informal institutions in agency theory modelling.