International Construction Survey, Nairobi

Nairobi is the fourth least expensive places to build in globally and the cheapest on the continent, according to the International Construction Survey (2019) by Turner & Townsend.

The survey found that it is cheaper to build in Nairobi than in all the African cities surveyed. These include Harare (most expensive), Kigali, Kampala, Johannesburg and Dar es Salaam. Construction cost in Zimbabwe’s capital was 1683.3 USD per sqm., more than double that of Nairobi (738.4 USD)

The survey used the average building cost per square metre of six different types of construction including apartment high-rise, prestige office block, large warehouse distribution centre, general hospital, primary and secondary school, and shopping mall.

Nairobi’s construction outlook remains unchanged with contractors getting margins of 8.5% on average, while construction activity is expected to slow down in 2019. The report also shows that construction inflation costs in Nairobi are expected to remain the same as in 2018, at 3%.

Construction of affordable housing and low-cost health facilities should help to offset the slowdown in high-end private sector development. In Kenya, the biggest growth sectors are residential and social housing, industrial manufacturing and distribution, and power and utilities.

The report highlights a key issue in construction, the cost of steel. A recent imposition of steel import tariffs could raise the prices of steel, a key input in construction by up to 25% in most markets globally. However, some markets including Nairobi, would be unaffected.

Five of the most expensive cities for construction include San Fransisco, New York, London, Zurich and Hong Kong in that order. The median cost of construction for all cities surveyed was 2,272 USD.

The finding by Turner & Townsend is in contrast to another survey by Arcadis which found that Nairobi was the second most expensive city for building in Africa after Johannesburg. The Arcadis study however, used a different criterion.

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