Real estate investments between January and October 2023 hit Ksh214 billion despite the hike in construction costs.
According to the Status of Build Environment Report released by the Architectural Association of Kenya (AAK), applications for 4,770 projects were submitted to the National Construction Authority(NCA) for approval.
Out of the 4,770 projects, 1,821 were purely residential projects with the value of the projects pegged at Ksh97 billion.
However, this was a decline from the 2022 investments, an indication that the hiked costs may have made Kenyans scale down their investments.
On the other hand, mixed developments, buildings that serve residential and commercial purposes, were valued at Ksh64.3 billion while the value of commercial properties within that period was Ksh37.6 billion.
"Mixed-use development constituted 30 per cent, while commercial development constituted 15 per cent, both of which recorded growth compared to the year 2022, which recorded 24 per cent and 11 per cent, respectively," read the report in part.
Notably, most of the projects were undertaken in Nairobi County followed by Kiambu County.
"Among them, 61 per cent had submitted approval applications in Nairobi County, 20 per cent in Kiambu County, 7 per cent in Nakuru County, and 4 per cent in Mombasa County. Additionally, 2 per cent each came from Kisumu, Kilifi, Tharaka Nithi, and Uasin Gishu Counties," read the report in part.
In Nairobi alone, projects submitted for approval were valued at Ksh176.1 billion.
"However, this reflected a marginal decrease compared to the same period in 2022, which saw 2078 applications valued at Ksh191,627,294,248.
"In the same period, the county generated revenue through approvals amounting to Ksh1,881,858,234. There was a noteworthy increase of Ksh1,156,354,824 in the revenue collected by the City-County in 2023 compared to the corresponding period in 2022," the report added.
Hiked Costs
The experts indicated that construction costs hiked owing to increases in land prices, cost of construction materials, fuel prices and the weakening Shilling that made imported materials expensive.
In 2022, construction costs per square metre ranged between Ksh34,650 - Ksh77,500. However, in 2023, the rate was between Ksh41,600 - Ksh100,800 per square meter.
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