The value of buildings approved for construction in Nairobi last year increased by 33.6 percent to Sh217.04 billion in the 12 months to December compared to the previous year, on a resilient recovery in the residential housing market segment from Sh162.45 billion in 2022
The latest figures from the Kenya National Bureau of Statistics show that the value of approvals grew by Sh54.59 billion from Sh162.45 billion in 2022.
This growth was largely attributed to the residential buildings, which accounted for 82.9 percent of the approvals in 2023 from 78.4 percent in the year before.
Approvals for commercial buildings in Nairobi accounted for 17.1 percent in 2023 from 21.6 percent in the previous year. Commercial property market, which had been roiled by oversupply before Covid-19 has been hit with a tough economic environment that has seen small businesses go for lesser spaces even as some companies adopt remote and co-working to cut costs.
August 2023 posted the highest value of approvals in a single month in 2023 at Sh31.7 billion followed by July at Sh26.1 billion and December at Sh24.9 billion.
Construction projects have been squeezed by the high cost of materials especially cement on upheavals in key source markets and weakened shilling against the US dollar and other world majors.
The cost of building went up by 2.71 percent year-on-year in the third quarter of 2023 driven by a rise in the cost of cement, steel, fuel, and other key inputs.
The rapid depreciation of the Kenya shilling against the US dollar played a pivotal role in the cost of construction inputs during the period under review.
Kenya imports most of its construction materials such as steel, cement clinker, fuel, machinery, and equipment, with the weakening shilling making the cost of these imports shoot up.
Cement consumption fell slightly in the nine months to September from 7.09 million tonnes to 7.02 million metric tonnes in the same period the year before.
