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Skyrocketing construction costs threaten Kenya’s architectural landscape

Christine Akinyi by Christine Akinyi
December 11, 2023
in News
Reading Time: 2 mins read

 

The architectural landscape in Kenya is experiencing a seismic shift as the cost of construction materials skyrockets, driven by a drastic plunge in the value of the Kenyan shilling.

The recent report on the status of the built environment by the Architectural Association of Kenya (AAK) underscores an alarming surge in expenses, with construction costs per square meter escalating by over 20.0% within the past year.

At the beginning of the year, the cost of building a square meter ranged from Sh 34,650 to Sh 77,500.

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However, the current statistics indicate a staggering surge, marking the range between Sh 41,600 to Sh 100,800

This substantial increase has been primarily attributed to the inflated prices of imported construction materials and equipment, profoundly impacting project budgets and timelines.

The report highlights several factors contributing to this inflationary trend. The depreciation of the Kenyan shilling against major currencies, especially the US dollar, remains a critical catalyst.

Given that Kenya relies heavily on imported materials like steel, cement, machinery, and fuel, the weakened currency has exponentially amplified the costs of these crucial components.

Over the last 12 months, the prices of fundamental building materials such as steel, iron, cement, and fuel have surged significantly. Steel prices per kilogram rose to Sh 146.3 from Sh 140.6 within a year, placing undue strain on the construction industry.

Similarly, the cost of a bag of cement surged from Sh650.0 to Sh750.0, further exacerbating the financial burden on developers and construction projects.

Moreover, the escalated expenses extend beyond material costs, encompassing logistical and operational overheads due to increased fuel prices. The doubling of value-added tax (VAT) on fuel to 16.0% from July 1 compounded the challenges faced by the sector, amplifying construction expenses and leading to potential budgetary constraints and delays in project completions.

The cumulative impact of these economic challenges poses significant hurdles to the growth and development of the construction sector in Kenya.

The scenario underscores the urgent need for comprehensive strategies and interventions to mitigate these escalating costs, as they threaten to impede progress and stifle the potential expansion of construction projects across the country.

The current trajectory of rising building material prices calls for concerted efforts from stakeholders, policymakers, and industry experts to navigate these turbulent economic conditions and sustain the momentum of growth in Kenya’s construction sector.

 

 

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