Nairobi residential approvals at all-time low of Sh2.7bn

The value of residential building approvals in Nairobi fell to an all-time low of Sh2.7 billion in May 2021, highlighting a freeze on new projects by investors amid tough economic conditions caused by the Covid-19 pandemic.

Data from the Kenya National Bureau of Statistics (KNBS) shows that approvals of new projects fell to Sh2.7 billion in May 2021, which is the lowest since 2010 when the agency began publishing the reports.

The drop came on the back of massive layoffs, salary cuts, and unpaid leave policies that were adopted by firms to stay afloat amid tough lockdown measures that were imposed last year to contain the spread of the virus.

These measures, however, impacted investors whose purchasing powers were curtailed, forcing them to turn to ready-built instead of building new ones as prices dropped significantly.

For example, in the 12 months to June, houses in Nairobi on average recorded a 1.7 percent prices drop amid an oversupply of apartments, the latest realtor HassConsult survey shows.

Likewise, detached house prices dropped by 1.7 percent. However, semi-detached units prices rose by 0.7 percent on average.

“The property market is experiencing static sales price-performance driven by the oversupplied apartment market in Kilimani and Kileleshwa, down 9.5 percent and 6.9 percent respectively in the last year,” said HassConsult.

The KNBS data also shows that the value of approved buildings in Nairobi fell by Sh67 billion in the five months to May this year, from Sh110 billion during the same period last year.

However, the report shows that the value of approved non-residential buildings improved from Sh619 million in April to Sh2 billion in May.

Rising steel prices are also set to push up the cost of building projects thus reducing the application for new projects.