Nairobi — The value of building approvals in Nairobi fell by Sh34.2 billion in the first eight months of 2025, reflecting the impact of high interest rates and costly construction materials on new developments.
Data from the Kenya National Bureau of Statistics (KNBS) shows that approvals declined to Sh114.3 billion between January and August this year, down from Sh148.5 billion in the same period last year.
According to the KNBS, approvals for non-residential projects fell from 25,456 to 24,188, while residential approvals dropped from 122,823 to 90,142.
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"The total value of building plans approved by Nairobi City County increased slightly from Sh11.16 billion in July 2025 to Sh11.19 billion in August 2025," KNBS noted.
"Residential approvals rose by 13.8 percent to Sh9.6 billion, while non-residential approvals decreased by 41.2 percent to Sh1.6 billion over the same period," the report added.
The slump comes amid elevated interest rates, which have made borrowing more expensive. Commercial banks have been charging rates of around 14 percent on loans.
However, the Central Bank of Kenya (CBK) earlier this month cut its benchmark lending rate by 25 basis points to 9.25 percent in a bid to encourage private-sector credit growth.
The construction industry has also been hit by rising input costs. Between December 2022 and 2023, the price of steel reinforcement bars rose by 14.29 percent, while the cost of a 50kg bag of cement increased from Sh650 to Sh750, further inflating project costs and slowing new developments.
By Erick Malala
