Real estate developers had to deal with rising costs in 2018. The cost of materials for residential and non-residential buildings increased by 3.1 per cent in 2018 while labour cost increased by 5.3 per cent in 2018.
According to the 2019 economic survey by the Kenya National Bureau of Statistics, the cost of construction labour has been increasing at a declining rate since 2014; from an increase of 10% in 2014 to an increase of 5.3% in 2018. On average, the monthly wages for construction workers whether skilled, unskilled or semi-skilled, had increased by 25% between 2014 and 2018.
Meanwhile the cost of construction material has been on an upward trend every year since 2015; from a mere 0.9% in 2015 to 3.1% in 2018.
In 2018, monthly average basic wages for the unskilled, semi-skilled, and skilled workers increased by 5.1, 5.3, and 5.6 per cent, respectively, as recommended by the collective bargaining agreements. The wages are as negotiated between employer associations in the construction industry, and the Kenya Building, Construction, Timber and Furniture Industries Employees Union.
The survey also shows that despite of the government’s affordable housing agenda getting on course, the private sector still reigns over the supply of housing.
In Nairobi City County, private developers completed a total of 12,304 buildings for both residential and non-residential buildings reported in 2018 compared to 11,902 in 2017. Total value of completed private buildings in Nairobi City County increased by 4.6 per cent from KSh. 86.1 billion in 2017 to KSh. 90.1 billion in 2018.
At the same time the government authorities managed to complete just 430 public residential buildings in 2018 compared to 1164 in 2017, a significant decline. During the same period, the value of public buildings completed was KSh. 1.5 billion compared to KSh. 2.3 billion in 2017. However, a total of 2,028 housing units valued at KSh. 4.38 billion were under construction in the same year.
The National Housing Corporation completed 180 of the units while the State Department of Housing completed 250 of the government buildings in Nairobi County.