The Construction Industry experienced an influx of projects in 2023 with the National Construction Authority receiving a total of 4,770 applications between January and October 2023.
This is according to the Status of the Built Environment (SBE) 2023 released by the Architectural Association of Kenya (AAK).
According to the report, 3,354 of these applications were successfully registered with most of them at 54 percent being residential development.
“However, the sector faced formidable challenges, notably the escalating construction cost. The cost surged from KES 34,650-77,500 at the beginning of 2023 to KES 41,600-100,800 by December 2023,” read the report in part.
“This spike was attributed to the increased costs of construction materials and fuel, exemplified by the surge in the price of steel reinforcement bars from KES 140.60 per kg in December 2022 to KES 160.26 per Kg in December 2023, marking a 14.29% increase,” continued to read.
Continued depreciation of the value of the shilling against the dollar also played a big role in the increase in the cost of construction materials.
“The cost of cement rose from sh.650 per 50 Kg bag in December 2022 to sh.750 in December 2023, marking an approximate increase of 15.38%. These escalations have been largely a result of the increased import costs influenced by the devalued currency,” read the report.
While releasing the report, AAK President Florence Nyole said another factor affecting the construction industry was the excessive increase in land rates.
“Land rates have surged by an alarming 6.41-fold since December 2007. In urban centers like Nairobi, what was valued at sh.30.3 million has risen to sh.190.4 million in 2023. These exorbitant construction costs, hinged on the cost of building materials and land, threaten the achievement of affordable housing,” said Florence Nyole AAK President.
Development Control in counties
Nairobi County Government recorded the highest number of building applications at 1,985 with a total value of sh.176,168,787,693 between January and November 2023. Out of the 1,985 received applications, 1,889 were approved, 86 were deferred and 10 were declined.
The revenue collected by the county government from the application approvals was sh.1,881,858,234.
Mombasa County Government, on the other hand, received 702 applications between January and October 2023. 63 percent of these were approved and 37 percent were either deferred or rejected.
However, a survey by AAK shows that only 16.7 percent of the development applications submitted by its members to the county were approved.
The members attributed this to the difficulty in receiving approvals, whereby the approval process would be frustrated without providing facilitation to the county officials.
Development Control in the counties has been a critical challenge stressing construction industry professionals.
The survey revealed that the delays in construction permitting experienced in the counties are not inherent to the systems or external factors but result from human actions and oversights.
“While 43 percent of AAK members in Nairobi noted an improvement in approval times, with an average of eight weeks, seven percent reported the most prolonged approval timeline, exceeding 32 weeks,” read the report.
AAK President Florence Nyole attributed this to the lack of legal framework and other issues.
“The absence of essential planning and legal frameworks, such as local physical development plans, zoning regulations, Development Control Regulations, and Building Regulations, contributed to haphazard developments in urban areas. For instance, the Nairobi Development Control Ordinances expired in 2014, and the zoning guidelines have been arbitrary,” said Nyole.
Affordable Housing Program
With a total project pipeline of 838,876 units, the government has completed 584 units and launched 38,879 units, and 34,355 units were waiting to be launched as of November 2023.
The engagement of consultants in the Affordable Housing Program (AHP) has been AAK’s focus since the inception of AHP under the Big Four Agenda.
AAK collaborated with the State Department of Housing and Urban Development (SDHUD) to establish an AHP Forum, supported by an MoU between SDHUD and professional bodies (AAK, Institute of Engineers of Kenya, and the Institute of Quantity Surveyors of Kenya) to advise the government and influence industry stakeholders in AHP matters.
The sector faced challenges including high construction material costs and high land rates.