Market News

Investor flight risk in city building approvals delay

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Architectural Association of Kenya president Mugure Njendu during a report launch in July at a Nairobi hotel. PHOTO | DIANA NGILA

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Summary

  • 2020 will be a bad year as investors are likely to defer developments or relocate to friendly markets.

Hundreds of construction sector jobs and multibillion-shilling property investments are frozen by the delayed processing of building approvals at the Nairobi County government, architects say.

Architectural Association of Kenya president Mugure Njendu said despite a 12.4 percent improvement in the first six months, 2020 will be a bad year as investors are likely to defer developments or relocate to friendly markets.

“The first six months showed good recovery since the building approvals committee met fortnightly but only two sittings to review projects have taken place since then. Why are we stopping investments? Give us (architects) business, jobs for Kenyans and a market for suppliers,” said Ms Njendu

Ms Njendu cautioned that the derailment could adversely hurt Kenya’s global position on ease of doing business.

In the Doing Business 2019 report released by the World Bank, Kenya scored a 63.49 rating where it took 159 days and one went through 16 procedures for building approval.

“Kenya position was 61 in 2018 and 56 in 2019 but construction permitting fell from 128 in 2018 to 124 in 2019. It is Kenya’s worst performing sector that we have protested to City Hall, but to date no response has been given or action taken to remedy the situation,” she said.

According to the just released leading economic indicators, the January to June period witnessed a 12.4 percent rise in new project approvals valued at Sh113.3 billion compared to 2018’s camparative period that reported Sh100.8 billion approvals.

In 2019, residential developments accounted for a 20.1 percent surge valued at Sh75.9 compared to 2018’s reported Sh63.2 billion approvals. Commercial developments reported Sh45.4 billion.

Low approvals mean small revenue collection for Nairobi County government that charges a fee for every approval based on the total value of the project.

The situation could worsen with Kenya’s parliament annulling a planned development of an online land transactions portal that would have enabled property owners to dispose of land without the preparing sales agreements through lawyers followed by appearance before a Lands control board sitting.