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Kenya’s building sector remains attractive to investors

Saturday May 20 2023
Rental Apartments

Rental apartments in Machakos County, Kenya. PHOTO | EVANS HABIL | NMG

By Albert Mwazighe

Kenya’s construction sector registered a growth of 4.1 per cent in 2022, driven by a relaxed regulatory environment and developments in infrastructure that made it attractive for investors.

According to Kenya’s Economic Survey 2023 released early May, the number of building plans approved in Nairobi, for instance, increased by 58 percent.

This paved way for real estate investments worth more than Ksh162.5 billion ($1.18 billion) in the country’s capital. As a result, cement consumption also increased from 9.1 million metric tonnes in 2021 to 9.5 million metric tonnes in 2022.
Meanwhile, the length of national roads under bitumen increased from 18,700km in 2021 to 19,100km in 2022.

Read: Chinese, Qataris Kenya housing deal flops

Housing spend

Overall government approved expenditure on housing for 2022/23 is expected to increase to KSh19 billion ($138.4 million) from KSh14.1 billion ($102.7 million) in 2021/22, while that of roads is expected to rise to KSh191.4 billion ($1.4 billion) in the same period.

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An earlier finding by real estate firm HassConsult in April shows that improved infrastructure and affordability of land, especially in satellite towns, made the country attractive for potential real estate investors in the first quarter of 2023.

A proposal to extend the Standard Gauge Railway to Athi River’s Export Processing Zone for instance, sparked speculation that has led to a 6.1 percent increase in land prices in Athi River in the period.

The growth rate is comparable to Ngong, the best performing town, which witnessed a 6.2 percent surge in land prices, also as a result of developments in road network and other forms of infrastructure.

Read: Wealthy Kenyans turn to real estate investments

Lucrative investment

In the residential sub sector, apartments are expected to be the most lucrative form of investment, followed by semi-detached houses, and then detached houses.

According to HassConsult, over the last 20 years, the share of apartments in the residential market has grown to 64.4 percent, while that of semi-detached homes stands at 28.1 percent.

With Kenya’s housing deficit standing at more than 200,000 units a year, the market remains ripe for investment.
The average sales price for detached houses is about Ksh48.7 million ($354,956.3), while semi-detached homes are currently selling for Ksh30.2 million ($220,036.4).

Apartments average at Ksh15.07 million ($109,799.6).

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