The Architectural Association of Kenya today launched the Status of the Built Environment report for January-June 2021.
AAK produces this report twice a year and presents highlights in the real estate sector, tracking developments in land, financing, infrastructure, policy and legislation. The report also presents developments in public sector infrastructure developments.
The report for the first half of 2021 highlights a lot of interesting trends in the Real Estate Sector. After the worst economic downturn in decades, further dampened by the recent tightening of lockdown restrictions in response to the second wave of the pandemic and the recommencement of load shedding, economic growth – while admittedly coming off a low base – is still widely expected to show some positive growth of around 6.9% of the Gross Domestic Product (GDP) expected this year.
The hospitality sector continues to be the most affected as far as the effects of the COVID-19 pandemic, with a downwards trend in rents, development pipeline and leasing activity. However, it is encouraging to note that the Government has continued to soften some of the COVID-19 restrictions that had resulted to significant contraction in the sector’s performance. We look forward to seeing a trend upwards in this sector based on the efficacy and reach of the vaccination drive that is currently underway in Kenya.
Forecasting the likely level of activity in the local residential property market this year is unusually difficult. Areas which offer affordably priced homes – and an appealing lifestyle – are likely to prove most resilient in 2021. The enactment of the Sectional Properties Act 2020 during the course of last year fundamentally altered the apartment housing market in that it made homeownership accessible to many first-time buyers for the first time and also made ownership a viable option for many aspirant buyers who previously thought they could only afford to rent.
“In 2021, the built environment sector is expected to improve, assuming a slowdown in COVID-19 cases and recovery in the global economy. The AAK believes that the construction industry may grow by up to 3.9% this year. This growth will be driven by a sharp recovery in output levels compared to periods when works were not permitted or were severely restricted in 2020, with Q2 2021 in particular recording high growth Year-on-Year, assuming there is no repeat of the strict lockdown similar to last year. Importantly, we project that the growth will particularly propelled by huge infrastructural investments by the Government of Kenya. More noticeably, the on-going construction of the Nairobi Expressway, the Lamu Port under LAPSSET and the dualing of the Nairobi-Mombasa Highway as well as the implementation of the affordable housing agenda will play a critical role in the recovery of the sector. Important to however is that the growth of the real estate and construction sectors will be pegged on the overall performance of the economy. Presently, the Treasury has projected that Kenya’s GDP will grow by 7% in 2021.”In his address, Arch. Wilson Mugambi, AAK President.Loading...
Our recommendations based on the report and the state of the industry is that priority needs to be given to local Professionals, manufacturers and builders with a focus on building capacity and resilience in the industry. Further, we recommend that there is need for more support to the construction and real estate sectors to help them recover from the adverse effects of the COVID-19 pandemic. Importantly, we are of the view that government support to the broader built environment sector through tax incentives and promotion of local content policy will help encourage more investments.
In the Nairobi Metropolitan Region, we also note that there is need for the proposed development control policy should factor in climate change mitigation and adaptation strategies based on previous studies that have shown how adverse the effects of urban densification can be. As a significant contributor to the country’s GDP, a positive performance of the construction industry will play a critical role in helping Kenya BUILD BACK BETTER.
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