Construction sector tipped to rebound on State’s housing plan

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Analysts say the one million housing units plan has already piqued developers interest.

Construction activities are likely to rebound this year from a six-year low buoyed by State’s affordable housing plan, relative political certainty and optimism over review of a cap on loan charges, developers have forecast.

Organisers of the annual East Africa Property Investment (EAPI) said real estate investors are “energised” by the State’s plan to give incentives for construction of up to a million residential housing units by 2022 at Sh2.3 trillion.

“Kenya is once again at the top of investors and developers lists of attractive investment destinations. We’re hearing a lot of positive news from our stakeholders, and we expect some eye-catching announcements at the EAPI in April,” EAPI Summit’s managing director Kfir Rusin said in a statement.

“East Africa continues to remain attractive due to increasing urbanisation and consumerism, private equity investment, the maturing state of the market, as well as ongoing infrastructure improvements.”

Construction activities grew at the slowest pace in six years in the July-September period at 4.9 per cent compared with 7.8 ‘per cent a year earlier, latest data from the Kenya National Bureau of Statistics shows.

READ: Govt to build a million affordable homes in Uhuru's last term

The slowdown was evident with cement consumption dipping by 13.09 per cent year-on-year to 1,408,566 metric tonnes in the three months to September 2017.
“We’re already seeing the signs of a rebounding market with the inception of funds targeting mixed-use developments, as well as global equity firms investing in Kenyan developers,” Mr Rusin said.
“While Ethiopia and Tanzania’s economies continue to thrive, we still see greater value from a real estate perspective in Kenya’s more diversified and established economy.”
Head of sub-Saharan African operations at Broll Property Group Leonard Michau said a considerable number of developers still view Nairobi as ideal destination for high-end office space despite concerns over oversupply in the segment.