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Value of Nairobi building approvals up 20pc
The Sh98.7 billion value of approvals in the first half-year marked a rebound in the second quarter from a 31.2 percent decline in the first quarter which was hit by expensive capital and delays in licensing.
The value of buildings approved for construction in Nairobi County grew 20.45 percent in the first half of the year to Sh98.8 billion, data by the Kenya National Bureau of Statistics (KNBS) shows, lifted by a pipeline of newly scheduled projects.
The figures show the value of buildings approved for set up in the capital city rose from Sh82.02 billion in the first six months of 2023.
In the first half of 2024, June recorded the highest number of approvals of Sh25.1 billion ahead of May's Sh20.1 billion.
March posted the lowest approvals valued at Sh12.1 billion and Sh12.5 billion in January.
"The jump for 2024 is more of a forward planning approach in preparation for future developments," said Mr Samuel Kariuki, the Chief Executive Officer (CEO) of Mi Vida Homes.
"The process which involves getting documentation okayed by Nema, two for architectural and structural approvals by the city council and the National Construction Authority can be a bit time-consuming and developers want to get that out of the way and this is why the approvals were high this half year."
Mr Kariuki said because of the government's plan for affordable housing, developers are aligning themselves with this vision to meet housing demand.
The Sh98.7 billion value of approvals in the first half-year marked a rebound in the second quarter from a 31.2 percent decline in the first quarter which was hit by expensive capital and delays in licensing.
The value of buildings approved in the capital fell from Sh56.7 billion in the first quarter of 2023 to Sh39 billion in a similar quarter in 2024 but rose to Sh98.7 billion at the end of June.
The drop was attributed to the rising cost of capital and delays in issuing building permits after floods in April.
Nairobi Governor Johnson Sakaja, suspended approvals for building developments and excavations and said rainfall levels had been very high, and blamed encroachment on ripatian for flooding. He also ordered an audit of all buildings constructed in the city over the last two years.
The Architectural Association of Kenya (AAK) says there haven't been clear guidelines on approvals which has seen developers hold back from pursuing construction.
"Delayed approvals up to more than one year have led to losses since one cannot start the project on time," AAK President Florence said.
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.
Cement consumed in the first quarter of the year fell to 1.9 million tonnes from 2.2 million posted in a similar period last year while the quantities produced shrunk from 2.3 million tonnes to 2.1 million in the comparative period.
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.
"Political instability has also contributed to investors seeking investments they can recoup their money easily, the cost of finance is quite high and the return on investments has been hit," Diana Musyoka, an honorary registrar at AAK said.
