The economy is expected to bounce back in 2018 after slowing in 2017, a year of drought and political turmoil. The government forecasts economic growth to rise above 6 percent. Recent growth in local and foreign investment suggests a continued increase in demand for residential and commercial buildings. But, lingering political tensions and the negative effects of an interest rate cap policy introduced in 2016 pose downside risk.
Population growth and a need to improve transport links are fuelling construction. Kenya’s urban population is expanding at an annual rate of 4.15 percent, generating demand for new cities. However, a surge in residential and commercial building since 2013 has created some short-term oversupply in the market. But the government has pledged to spend USD26bn building a million low-cost homes over five years.
Among plans for infrastructure are a USD140m port at Kisumu and three airports at Lamu (USD188m), Isiolo (USD175m) and Lake Turkana (USD143m). The World Bank is funding a USD285m aviation modernisation project to improve airport facilities. Major road improvements include making the Nairobi/Mombasa road a dual carriageway.
|Market:||Staying the same|
|Cost escalation 2017–18:||2.5%|
|Cost escalation 2018–19:||3.0%|
|Location factor (USD):||60.1|
The real estate sector should recover in 2018 with high housing demand, improved infrastructure and an expanding middle class in Kenya. Demand for affordable housing grows with some estimates suggesting that more than 210,000 new homes need to be built annually. Longer term, there is also growing excitement over oil and gas related expenditure, following recent discoveries.
This content is part of the International construction market survey 2018