Market News

Private, public infrastructure spend lifts construction 9.2pc

sgr

A worker at the standard gauge railway Mombasa terminus. photo | tonny omondi

Heavy private investments in real estate and continued public spending on infrastructure saw the construction industry grow 9.2 per cent last year, providing employment to 163,000 Kenyans.

The Economic Survey 2017 said new road projects will see Sh156.5 billion spent on the ongoing 10,000-kilometre annuity programme, a 38.3 per cent increase from last year’s Sh113.2 billion.

The survey notes that while demand for cement in construction of the multi-billion standard gauge railway (SGR) slowed down, real estate fuelled the sector’s growth with consumption rising by 10.5 per cent from 5.7 million tonnes in 2015 to 6.3 million tonnes last year.

“The volume of cement exports declined for the third consecutive year to 420.2 thousand tonnes in 2016.

“This has been partly due to the domestic absorption of cement in the construction activities especially the SGR construction,” says the survey.

Nairobi registered a 7.6 per cent growth on newly completed buildings worth Sh76.2 billion, according the survey. The City Hall approved new building plans worth Sh308.4 billion last year, a 43.3 per cent growth compared to Sh215.2 billion in 2015.

This follows heightened activity among multinational brands seeking to make Nairobi their African hub in plan launch of their activities across the continent.

Among pending projects is the 67-floor twin Hass Towers, a mixed use development that will also house Hilton Hotel, a five-star global brand, as well as a 300-metre high office block.

The Sh20 billion project has since been approved and will be executed by China State Construction Engineering Corporation.

The survey says the National Housing Corporation also injected Sh877.9 million into several construction projects with local and foreign investors putting money in commercial and residential development in key towns.

However, credit to the construction industry dropped marginally from Sh106.3 billion in 2015 to Sh104.8 billion in 2016 as banks generally froze lending towards the end of last after the rate controls were put in place.

With ongoing changes in the regulatory regime where approvals will now be sourced from one online portal at City Hall offices, the sector could experience heightened activity especially after the government directed private individuals to stop paying fees for services procured from regulatory agencies that are funded by the exchequer.