Region/Countries: Africa and the Middle East, East Africa Industry: Other Date: July 2018

Why this is important to Wisconsin businesses: Opportunities exist in the office, residential, retail and industrial subsectors.

The construction industry in Kenya is set to grow steadily for the next decade. BMI Research, which analyzes industry trends, forecasts that construction is projected to grow 8.7 percent this year, and continue growing steadily through 2026, with a projected annual growth rate of 6.2 percent, which would mean Kenya outperforms all other countries of sub-Saharan Africa. This growth is coming thanks to the Kenyan government’s huge spending on infrastructure development. The real estate and construction sectors continue to be key drivers of economic growth in Kenya, as they have been for the last five years, and the Kenyan construction industry contributes 7 percent of GDP. In addition, data from the Kenya National Bureau of Statistics (KNBS) shows that the construction industry grew by 9.2 percent in 2016 after an expansion of 13.9 percent registered in 2015.

Infrastructure is one of the key components of communication and development in Kenya. The Kenya Vision 2030 strategy calls for integrated roads and interconnected railways, ports, airports, waterways and communications, as well as the provision of adequate energy. The Kenyan economy is dependent on roads and road transportation, which constitutes about 80 percent of total internal freight and passenger traffic in Kenya. According to KNBS, in 2017, overall expenditures on roads were expected to increase by 38.3 percent, from $ 1.1 billion in 2015-16 to $1.6 billion in 2016-17. Total development expenditures were also expected to grow by 31.7 percent, from $800 billion in 2015-16 to $ 1.1 billion in 2016-17. Development expenditures on trunk and primary roads were expected to grow by 36.2 percent during the same period.

According to the latest update by the World Bank Group, Kenya faces a housing deficit of over 2 million units, with nearly 61 percent of urban households living in slums. The real estate market and the building and construction sectors have seen immense growth over the past decade. Due to a steadily growing middle class, there has been increased demand for housing in urban centers. With this demand for affordable housing, opportunities exist in the construction of residential, commercial and industrial buildings, including prefabricated low-cost housing, which has increased greatly in recent years. An estimated 210,000 new residential units need to be built annually to keep pace. There have been marked increases in apartment blocks and gated estates. What’s more, solar power is required for new homes using 100 liters or more of hot water per day and all commercial space, creating another opportunity for foreign firms to get involved in helping create the housing of the future.

In Kenya, developers have a choice of four growing markets: office, retail, industrial and residential. There is a high demand for grade A office space, providing opportunities for construction and fittings supply companies. In the retail sector, Nairobi is home to most of the country’s modern shopping malls. In the industrial market, development of business parks constitutes a new growth trend. And in the residential market, houses in gated compounds and apartments are in greater demand than standalone single-family homes. The current trend is to develop out-of-town integrated communities, targeting mainly the middle class. Investment opportunities are also available in the manufacturing and supply of construction materials and components for the sector.