Nairobi Building Approvals Plunge as Material Costs Keep Developers on Edge
NAIROBI — Nairobi’s construction sector has slowed sharply in the first half of 2025, with the value of building approvals dropping by more than 50% compared to the same period last year. Data from the Kenya National Bureau of Statistics (KNBS) shows that building plans approved in June 2025 totaled KSh 13.7 billion, down from KSh 29.3 billion in June 2024. After adjusting for rising construction costs, the real value fell to KSh 11.5 billion from KSh 25.1 billion, highlighting the financial strain developers face amid elevated prices of key building materials.
The slowdown comes after a volatile year, with approvals peaking at KSh 34.6 billion in March due to large commercial projects before collapsing to a year-low of KSh 7.5 billion in May. Residential projects, which account for roughly 80% of all approvals, were hit hardest, falling 56% in real terms year-on-year, while non-residential projects dropped by 39%. Rising costs of cement, steel, concrete, and asphalt contributed to the squeeze, as the construction material index rose to 127.39 in the second quarter from 125.90 in the first. Though labor and equipment costs remained relatively stable, the surge in material prices is proving a major challenge for developers.
Industry analysts warn that unless material costs ease, Nairobi’s construction sector could face further stagnation in the second half of the year. While cheaper fuel provided some relief, the persistent inflation in critical building inputs threatens to delay or cancel planned projects, putting pressure on investors, contractors, and prospective homeowners alike. Developers are now closely monitoring price movements, hoping for cost stabilization to revive momentum in the city’s construction pipeline.