Nairobi’s building approvals dip Sh33bn on pandemic

The value of building approvals in Nairobi fell Sh33.4 billion in the two months to February, compared to a similar period last year as investors froze investments on the economic uncertainty caused by the Covid-19 pandemic.

Data by the Kenya National Bureau of Statistics (KNBS) shows that approvals fell to Sh18.4 billion, representing a 35.5 per cent decline.

The declining performance of the larger built environment industry is attributed to high national debt, labour shortages and reduced infrastructure spending.

“In terms of recovery, the residential and commercial construction sectors which were already experiencing a declining performance due to an oversupply of spaces prior to the Covid-19 pandemic are expected to take the longest time to recover,” former Architectural Association of Kenya (AAK) president Mugure Njendu said in February.

While construction of residential buildings dropped by Sh23.4 billion between the period, non-residential buildings recorded a drop of Sh9.9 billion.

This week, realtor HassConsult quarterly land price index showed that prices in Riverside, Parklands, Loresho and Kileleshwa recorded drops in asking prices of 1.7 per cent, 0.9 per cent, 0.2 per cent and 0.6 percent respectively.

This highlights a low demand for office spaces as companies adopt working from home formulas to prevent the spread of the virus.

“These measures have reduced the need for large offices and the effect is that the commercial space is seeing addition of space. Developers have responded by going slow in these areas and thereby softening demand,” said HassConsult Head of Development Consulting and Research Sakina Hassanali.