•According to the Architectural Association of Kenya, the sector is poised for a strong rebound , driven by the ambitious government affordable housing projects.
•Private developers are also reported to be making a strong comeback into the market, with applications for projects approval on the rise.
Kenya’s construction sector is projected to pick this year after a near two-year slump, architects now say, but concerns over high construction costs and taxes remain.
The slow down was a result of slow investment decisions after the Covid-19 pandemic, which was followed by the country’s general elections in August 2023, which saw investors hold back on spending in real estate projects.
According to the Architectural Association of Kenya (AAK), the sector is poised for a strong rebound this year, driven by the ambitious government affordable housing projects.
Private developers are also reported to be making a strong comeback into the market, with applications for projects approval on the rise.
The Status of the Build Environment Report by AAK, released on Tuesday, indicates the National Construction Authority (NCA) received a total of 8,154 applications for project registration, between January and December last year.
It approved 4,377 (53.7%) of the projects, the report notes. NCA also inspected 26,060 construction projects during the period.
Out of this, they suspended 18,192 (69.8%), of the projects due to non-compliance, but developers have a chance to improve issues raised and re-apply.
The total value of approved projects was Sh280.9 billion, the AAK report shows.
“2023 is positive as more investors are now coming back to have serious conversations on how we can kick start the projects or resume initial projects, so it is a very positive outlook,” AAK president Wilson Mugambi said.
A report by analytics and consulting company – Globaldata indicates that in 2021, the Kenyan construction market yielded $16.6 billion (Sh2.08 trillion), with an expected annual average growth rate of up to five per cent between 2023 and 2025.
The latest Kenya National Bureau of Statistics (KNBS) GDP data for the third quarter of 2022, together with leading indicators, show that the Kenyan economy registered strong growth in 2022.
Real GDP grew by 4.7 per cent in the third quarter of 2022, mainly driven by robust activity in wholesale and retail trade, education, electricity and water, and real estate sectors.
The rosy picture for the construction sector however comes with concerns of high costs, with prices and availability of essential construction materials like steel, paint, aluminium, cement and PVC expected to remain unreliable in Kenya.
The average price of a 50kg cement bag which was Sh550 in June 2021, went up to an average of Sh650 last year, with some regions in the country selling at a high of Sh750.
Locally, a kilo of steel rose from Sh100 to Sh180 late last year.
The Russia- Ukraine war accounted for the majority increase in steel prices in Kenya and globally.
Increase in fuel and transport costs have also impacted construction costs.