The value of building plans approved in the Kenyan capital saw a steep 27.5% decline to KSh 10.17 billion in January 2025 from KSh 14.02 billion in January 2024, according to data from Nairobi City County.
- •Residential projects bore the brunt of the contraction, with approvals plummeting by 38.1% year-over-year to KSh 7.19 billion.
- •Non-residential approvals increased by 24.1% to KSh 2.98 billion, marking a shift in investment focus toward commercial and industrial developments.
- •The real (inflation-adjusted) value of approved projects also saw a significant decline, down 31.4% to KSh 8.56 billion in January this year—a 20-month low.
The decline in January building plan approvals was even more stark when compared to December 2024, when approvals stood at KSh 24.11 billion, marking a staggering 57.8% month-over-month drop.
Nairobi’s construction activity reached its peak in June 2024, when the total value of approved building plans surged to KSh 29.28 billion. This period saw a surge in both residential and non-residential projects. The slowdown comes amid broader economic challenges and rising construction costs that have weighed on developers.
While residential approvals declined sharply, the slight uptick in non-residential projects suggests a potential shift in capital allocation, with investors favoring commercial and industrial developments over new housing.
The steep drop in approvals raises questions about the near-term trajectory of the sector, a key driver of urban growth and employment. If financing constraints and cost pressures persist, Nairobi’s construction slowdown could extend further into 2025, tempering the city’s expansion and real estate market.
According to the Kenya National Bureau of Statistics (KNBS), wage employment in Kenya’s private construction sector has shown consistent growth over recent years. In 2023, the number of individuals employed in this sector reached approximately 226,300, up from 222,200 in 2022. This trend engraves the construction industry’s role as a significant employer within the country’s private sector.