Slowdown in construction cuts use of galvanised roofing sheets

Production of galvanised roofing sheets slowed down in the first 10 months of last year amid a cooling off of the construction sector.

Data from the Kenya National Bureau of Statistics (KNBS) shows that the production of galvanised iron sheets stood at 209,400 metric tonnes compared to 214,200 metric tonnes in 2015.

The growth in consumption of cement was flat in the 11 months to November last year, at 10.5 per cent to 5.8 million metric tonnes compared to a growth of 10.3 per cent to 5.2 million metric tonnes recorded over a similar period in 2015.

The lack of growth in cement demand has been attributed largely to the largely due to the completion of civil works on the first phase of the Standard Gauge Railway.

Developers say that the fall in iron roofing sheet production mirrors a decline in demand that has been caused by use of alternative roofing material and construction of flat topped buildings.

“Just like is the case in many cities, developers of multi-storeyed buildings are putting up concrete flat roofs , and more private housing developers are now adopting new technology such as solar tiles and other roofing material like shingles and tiles. This has affected sales of galvanised iron sheets” said Edelweiss Realtors consultant Lucy Githire.

There has also been an increase in the use of aluminium sheets in the market, which compete with iron sheets for roofing.

In the latest GDP report—for the third quarter of 2016—KNBS said that the construction sector grew by 9.3 per cent in the quarter compared to 15.6 per cent growth in the same quarter of 2015, which was mirrored in the lower consumption of cement.

Demand for cement

However, the demand for cement could once again start to push ahead with the second phase of the construction of the standard gauge railway project expected to kick off in April covering 120 kilometres from Nairobi to Naivasha.

With the election approaching, the government is also likely to accelerate project spending in order to appease the electorate, which could also boost the cement sector.

The outlook for the real estate sector has also been brighter for the year, in spite of the upcoming general election which could negatively impact on the economy.

Real estate players Hass Consult, Cytonn Investments and Knight Frank have remained bullish on the sector, saying that although there could be a lull in the period around the election period, the sector should continue to see capital inflows hence new construction work going forward.

“Long term investments such as those in the real estate sector do not fluctuate around elections given projects have a long term horizon and long term return projections,” said Hass Consult research and marketing manager Sakina Hassanali.

Knight Frank Kenya said in its latest market update that the upcoming poll would not weigh heavily on the real estate market, citing an increase in value of approved building plans in Nairobi in 2016 which indicates that developers are preparing to build after elections.