16 January 2013

Kenya: Construction, Real Estate Sectors Pull Through Tough Year

Real estate and building and construction sectors posted strong performance in 2012, a year recalled for the high interest regime but which is now expected to ease.

Analysis of fresh data from the Central Bank and the Kenya National Bureau of Statistics reveals that the two sectors were resilient, even posting firsts.

For instance, quarterly GDP contributions from the two sectors hit a six-year peak in the second quarter of 2012, with real estate, renting and business services chipping in Sh23.5 billion in three months. Building and construction fell Sh7 million short to hit the Sh14 billion mark.

Non-bank financial institutions also seemed to have a keen interest in the sectors in the period, extending Sh27.7 billion to real estate in May 2012 alone, according to the CBK data.

Analysts say the housing market is "still very vibrant" with a strong demand in the low- to middle-income segments.

"The upper-income segment has slowed down a bit, but land prices continue to rise as more people want to speculate on the continuous capital appreciation of vacant land," Gikonyo Gitonga, the CBRE Kenya managing director, said in a past interview.

Demand for office space continues to grow,driven by small and medium firms in the professional services sector and international companies set base in the country, according to Gikonyo.

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