In our Construction Costs In Kenya 2021 guide, we placed last year’s average building rates at Kshs 33,450 – Kshs 72,400 per square metre, which is equivalent to Kshs 3,135 – Kshs 6,785 per square foot.
This was based on research that we had conducted during the fourth quarter of 2020, at the height of the COVID 19 pandemic. A lot has changed since then, and it’s only natural you’d wonder how recent events are affecting the construction costs in Kenya 2022.
On one hand, the PS for Housing and Urban Development allegedly claims that the construction rates in Kenya have dropped by 300% since 2017, while on the other, developers are increasingly lamenting that it now costs more to build in Kenya.
So, what’s true and what’s not? Are 2022’s construction costs in Kenya higher or lower than in previous years? And what exactly should you expect to spend on your building projects per square metre?
Well, we’ve done the research, we’ve crunched the numbers across various regions, and here’s the in-depth breakdown of the average construction costs in Kenya 2022.
Our team worked out the building costs per square metre after sampling a host of construction projects that were completed during the fourth quarter of 2021. What’s more, we’ve factored in the current prices of construction materials across various towns in Kenya.
Keep in mind that these cost estimates are inclusive of not only the building materials, but also the accompanying:
- Construction labour rates in Kenya
- The payments for building permits.
- The standard professional fees charged by Engineers, Project Managers, Quantity Surveyors, and Architects in Kenya.
Here’s a more detailed guide to the cost ratios for each building element.
Otherwise, if you happen to be a contractor, you might want to check out these success tips from the best construction companies in Kenya.
How Much Does It Cost To Build A House In Kenya In 2022?
In the year 2022, the construction costs in Kenya average from Kshs 34,650 per square metre to Kshs 77,500 per square metre.
And if you’d prefer to have it in feet, the same 2022 building rates convert to about Kshs 3,219 per square foot to Kshs 7,200 per square foot.
The huge disparity is due to the extensive variety of construction projects that we sampled across different regions.
Residential buildings tend to be the cheapest to build, followed by retail buildings, while industrial and commercial projects are the priciest.
A standard bungalow in Nairobi region, for instance, will cost you about Shs 34,650 per square metre, while a middle-class maisonette goes for Shs 38,500 per square metre.
Compare that to, say, a factory or lab in the same region – whose construction costs per square metre conversely average at Kshs 65,500.
But, that’s not all – the contrast widens when we cross over to high-rise office buildings. It turns out that, on average, commercial developers in Nairobi are spending as much as Kshs 74,000 per square metre. (Check out these Low Capital Real Estate Investment Options)
On the flip side, however, it was observed that whereas construction labour rates are particularly high in Nairobi, the availability of materials at competitive rates manages to cancel that out and make the region the cheapest for builders. It outdoes both Coast and Western/Nyanza regions in most of the project segments.
(You might also want to review the Per Square Metre Costs of Roofing Materials in Kenya 2022)
Construction Costs In Kenya 2022 – Regional Index For Average Building Costs Per Square Metre
This index outlines the cost of construction – per square metre – for the most common types of building projects across these three primary regions:
#1. Nairobi/Central Region’s Construction Costs In 2022
Nairobi’s Residential Projects – Building Rates Per Square Metre
- Standard Bungalow: Kshs 34,650 Per Square Metre.
- Middle-Class Maisonette: Kshs 38,500 Per Square Metre.
- Luxurious Bungalow: Kshs 48,450 Per Square Metre.
- Luxurious Maisonette: Kshs 55,400 Per Square Metre.
- Standard Low Rise Apartment Block: Kshs 38,200 Per Square Metre.
- Standard High Rise Apartment Block: Kshs 45,700 Per Square Metre.
- Luxurious Apartment Block: Kshs 57,400 Per Square Metre.
Nairobi’s Commercial Projects – Building Rates Per Square Metre
- Standard Low-Rise Office Block: Kshs 42,900 Per Square Metre.
- Standard High-Rise Office Block: Kshs 53,550 Per Square Metre.
- Luxurious High-Rise Office Block: Kshs 74,000 Per Square Metre.
- Business Park: Kshs 51,600 Per Square Metre.
Nairobi’s Retail Projects – Building Rates Per Square Metre
- Small Scale Shopping Centre: Kshs 39,000 Per Square Metre.
- Standard Urban Shopping Complex: Kshs 47,600 Per Square Metre.
- All-Inclusive Shopping Mall: Kshs 52,700 Per Square Metre.
Nairobi’s Industrial Projects – Building Rates Per Square Metre
- Double Storey Factory: Kshs 37,800 Per Square Metre
- High Tech Factory/Lab: Kshs 60,500 Per Square Metre.
- Warehouse: Kshs 36,000 Per Square Metre.
- Cold Storage Centre: Kshs 38,700 Per Square Metre.
- Administration Office: Kshs 41,400 Per Square Metre.
#2. Coast Region’s Construction Costs In 2022
Coastal Residential Projects – Building Rates Per Square Metre
- Standard Bungalow: Kshs 36,250 Per Square Metre.
- Middle-Class Maisonette: Kshs 42,700 Per Square Metre.
- Luxurious Bungalow: Kshs 52,500 Per Square Metre.
- Luxurious Maisonette: Kshs 51,350 Per Square Metre.
- Standard Low Rise Apartment Block: Kshs 36,500 Per Square Metre.
- Standard High Rise Apartment Block: Kshs 44,000 Per Square Metre.
- Luxurious Apartment Block: Kshs 55,000 Per Square Metre.
Coastal Commercial Projects – Building Rates Per Square Metre
- Standard Low-Rise Office Block: Kshs 50,050 Per Square Metre.
- Standard High-Rise Office Block: Kshs 61,100 Per Square Metre.
- Luxurious High-Rise Office Block: Kshs 77,500 Per Square Metre.
- Business Park: Kshs 62,000 Per Square Metre.
Coastal Retail Projects – Building Rates Per Square Metre
- Small Scale Shopping Centre: Kshs 39,200 Per Square Metre.
- Standard Urban Shopping Complex: Kshs 48,800 Per Square Metre.
- All-Inclusive Shopping Mall: Kshs 57,700 Per Square Metre.
Coastal Industrial Projects – Building Rates Per Square Metre
- Double Storey Factory: Kshs 37,800 Per Square Metre.
- High Tech Factory/Lab: Kshs 65,500 Per Square Metre.
- Warehouse: Kshs 29,000 Per Square Metre.
- Cold Storage Centre: Kshs 37,100 Per Square Metre.
- Administration Office: Kshs 41,000 Per Square Metre.
#3. Western/Nyanza Region’s Construction Costs In 2022
Western/Nyanza’s Residential Projects – Building Rates Per Square Metre
- Standard Bungalow: Kshs 36,850 Per Square Metre.
- Middle-Class Maisonette: Kshs 45,750 Per Square Metre.
- Luxurious Bungalow: Kshs 55,450 Per Square Metre.
- Luxurious Maisonette: Kshs 57,300 Per Square Metre.
- Standard Low Rise Apartment Block: Kshs 42,400 Per Square Metre.
- Standard High Rise Apartment Block: Kshs 48,000 Per Square Metre.
- Luxurious Apartment Block: Kshs 54,650 Per Square Metre.
Western/Nyanza’s Commercial Projects – Building Rates Per Square Metre
- Standard Low-Rise Office Block: Kshs 49,400 Per Square Metre.
- Standard High-Rise Office Block: Kshs 66,750 Per Square Metre.
- Luxurious High-Rise Office Block: Kshs 75,100 Per Square Metre.
- Business Park: Kshs 58,900 Per Square Metre.
Western/Nyanza’s Retail Projects – Building Rates Per Square Metre
- Small Scale Shopping Centre : Kshs 42,500 Per Square Metre.
- Standard Urban Shopping Complex: Kshs 49,000 Per Square Metre.
- All-Inclusive Shopping Mall: Kshs 56,200 Per Square Metre.
Western/Nyanza’s Industrial Projects – Building Rates Per Square Metre
- Double Storey Factory: Kshs 38,100 Per Square Metre.
- High Tech Factory/Lab: Kshs 63,500 Per Square Metre.
- Warehouse: Kshs 45,000 Per Square Metre.
- Cold Storage Centre: Kshs 40,000 Per Square Metre.
- Administration Office: Kshs 41,750 Per Square Metre.
Kenya’s Construction Costs In 2022 vs The Building Rates In 2021
If you compare Kenya’s average building costs in 2022 with the corresponding construction rates in 2021, it goes without saying that developers are now spending more per square metre than they did last year. (Here’s a building guide for aspiring diasporan developers)
So, sorry to break it to you, but the construction costs in Kenya have not dropped. The alleged utterances by the Housing and Development PS couldn’t be further from the truth. And, in fact, a 300% price decrease itself is arithmetically impractical.
Now, back to our calculations – it turns out that, on average, the construction costs per square metre have increased by 5.02% over the past year.
While building a high-end maisonette in Nairobi – like the calibre in Muthaiga, Karen and Runda – would have cost you Kshs 53,500 per square in 2021, the same now goes for about Kshs 55,400 per square metre. That’s a difference of 3.55%.
Although this class of properties is cheaper to put up in Mombasa, Coast developers are experiencing a slightly steeper hike than their Nairobi counterparts. The current average building rates for a luxurious maisonette in the region are Kshs 51,350 per square metre – up from Kshs 49,080 last year.
That’s a rise of 4.63%, which almost matches Western/Nyanza’s 4.60% hike on the same range of projects. Constructing a high-end double-storeyed house in Kisumu, Kakamega, Kericho, Kitale, Kisii, and Eldoret will now cost you about Kshs 57,300 per square metre – up from Kshs 54,780 back in 2021.
Still, that’s nothing compared to the rate of change we picked up across high-rise apartment buildings, as well as commercial, industrial and retail projects. Their construction costs have increased by up to 11.73%, with most of the categories falling between 5% and 8%.
Take, for instance, those standard high-rise apartment blocks that are increasingly coming up in Pangani, Kilimani, and South B. Their developers can now expect to spend about 8.17% more, which is slightly higher than the 7.04 – 7.95% bump on office blocks.
That said, here are the comparative graphs to give you a visual representation of how the construction costs in Kenya have changed between 2021 and 2022:
2021 vs 2022 Nairobi Region Building Costs (Per Sq. Metre)
2021 vs 2022 Coast Region Building Costs (Per Sq. Metre)
2021 vs 2022 Western/Nyanza Region Building Costs (Per Sq. Metre)
Why It Costs More To Build In 2022
The construction costs in Kenya have recently bumped up due to these five primary factors:
- Rising steel prices.
- The global rush for raw materials.
- High energy costs
- Increased taxation
#1. Rising Steel Prices
If there’s one construction material whose prices have soared quite astronomically, it’s steel.
Back in 2020, at the height of the COVID-19 pandemic, the global prices for steel rebars were averaging at about $450 per tonne. Then as the world started recovering in 2021, the prices shot up pretty dramatically, reaching as high as $850 per tonne mid-year.
They subsequently went down, though – but not by a huge margin. The average price as of the first quarter of 2022 was $750 per tonne, 66% higher than in 2020.
Well, of course, you can blame that on the recent growth in global demand. The World Steel Association (WSA) reports that the demand increased by 4.5% in 2021, up from just 0.1% in 2020.
But, the trend doesn’t end there – WSA further forecasts that the demand will rise by 2.2% through 2022, with Africa alone expected to record a 7.5% increase.
Another factor that will keep the prices high is China’s continued cancellation of its export tax rebates on steel products.
You see, China – which accounts for 57% of the global steel production – had this tax rebate programme that refunded iron and steel exporters 13% of the VAT charged. In mid-2021, however, the policy was cancelled to compel the steel industry to support the country’s record-high domestic demand.
Hence, it now costs more to bring in steel from China, and the rates are expected to persist through 2022.
Take, for instance, the D12 reinforcement bar that you were buying for Kshs 880 back in 2019. The same will now cost you upwards of Kshs 1,400 per piece.
#2. The Global Rush For Raw Materials
Steel is not the only construction material that we’ve been importing from China. Hardware stores bring in the bulk of their stock from China, while a majority of domestic manufacturers happen to source raw materials from producers in China.
Well, you could argue that, over the years, this has somehow helped in stabilizing Kenya’s construction costs – as Chinese producers are known to offer some of the best bargain rates.
In mid-2021, however, we witnessed a rather radical paradigm shift, as Chinese exporters started raising their prices quite exponentially – in response to the post-lockdown global rush for raw materials.
Hong Kong’s Export Price Index – which serves as a reliable indicator of China’s export rates – shows that the prices have been in an upward trajectory since last year.
Between February 2021 and November 2021, for instance, they shot up by 8.56% and haven’t shown any signs of slowing down.
The prices of exports are expected to continue soaring through 2022, as industries across the globe scramble to recover the huge unexpected losses made during the lockdown period.
Therefore, with Kenya still over-relying on Chinese raw materials and products, the building industry will keep getting caught up in the middle of the crisis. Hence, developers will have to put up with increased construction costs for the foreseeable future.
#3. High Energy Costs
In addition to importing raw materials at exaggerated rates, domestic manufacturers have to contend with the rising cost of energy.
The billing rates for electricity alone have increased quite astronomically in recent times, placing Kenya among the countries with the highest energy costs in the world.
By mid-2021, KPLC was charging manufacturers an average of Kshs 19.28 per kWh, which is substantially higher than the global average of Kshs 14.25.
Businesses in Tanzania have, in contrast, been paying about Kshs 11.61 per unit, while DRC charges Kshs 10.97, Rwanda Kshs 10.71, Nigeria Kshs 10.53, and South Africa Kshs 9.08.
Kenya’s unreasonably high rates continue to affect even small-scale plants such as machine cutters, stone crushers, welders, and brick makers.
The problem is further compounded by the rising fuel prices, which are set to hit an all-time high in 2022. Kenyans are now buying a litre of petrol at Kshs 131 – up from Kshs 110 at the time we were compiling 2021’s Construction Costs Index.
And get this – it’s about to get worse, as the Treasury’s Fuel Subsidy Fund is reportedly almost depleted. So, you can expect the prices to soon jump by as much as 16%, with the impact being directly and indirectly passed on to the 2022 building costs in Kenya.
#4. Tax Hikes
Another reason why Kenya’s construction costs are rising in 2022 is the recent tax hikes, which can be attributed to the country’s ballooning debt situation.
The government is under increasing pressure to not only pay its huge debts, but also restructure the monetary policies to sustain its overall creditworthiness.
Loans borrowed from the IMF, for instance, are compelling the government of Kenya to introduce tax reforms in a bid to improve the country’s tax-to-GDP ratio. More specifically, the National Treasury is seeking to achieve a 16.4% ratio in the 2022 financial year, up from 14.3% in FY18/19.
That, of course, translates to all sorts of tax hikes, whose ramifications are now exceedingly being felt in Kenya’s construction industry.
The 2020 Tax Laws (Amendment) Act set the ball rolling by introducing additional charges for both manufacturers and consumers.
One of its biggest highlights was the repeal of the 30% electricity rebate that companies had been enjoying courtesy of the 2018 Finance Act. This meant that from 2021, manufacturers would be left to contend with the high cost of power – a burden that is currently being passed on to builders through the recently revised prices of various construction materials.
It wasn’t long before the government followed that up with further amendments in the 2021 Finance Act – which, among other things, introduced excise tax and additional levies on selected raw materials.
Paint manufacturers, for example, are now paying a 10% excise tax on imported resin – in addition to 16% VAT on their petroleum-based ingredients.
Then towards the end of 2021, the Kenya Revenue Authority began making what it calls an inflation adjustment on selected duty rates. As a result, it now reserves the right to freely increase some of the excise tax charges by 4.97% – which further contributes to the ballooning of Kenya’s construction costs in 2022.
Just when Kenya was recovering from the inflation spikes we had witnessed in 2017, the COVID-19 pandemic came and turned the tables.
Kenya’s average inflation rate dropped from a 7-year high of 7.99% in 2017 to 4.69% in 2018, and then stabilized at about 5.2-5.4% in 2019 and 2020.
In 2021, however, the global rush for raw materials coupled with the rising dollar rates pushed the annual inflation rate beyond 6%, with some months experiencing as high as 6.91%.
This, of course, has had a significant impact on the construction costs in Kenya – as consumer prices have recently been increasing by an average margin of between 0.3% and 0.9% per month.
Although the country’s inflation rate eased to 5.4% in January 2022, the latest reports from the FocusEconomics Consensus Forecast expect the numbers to climb to an average of 6.1% by the end of the year.
That puts Kenya far ahead of the average global inflation rate, which is forecasted to drop to 3.81%, up from last year’s 4.35%.
Hence, you could say that in 2022, Kenya might be seeing a steeper hike in building costs than many other countries.
FAQs On The Cost Of Construction In Kenya
And now, to sum it all up, here are answers to some of the most commonly asked questions on Kenya’s building rates.
(Otherwise, for a more comprehensive roundup of answers, check out our Construction Kenya FAQs article. It provides insights into not only building costs, but also construction materials, building technologies, and construction approvals.)
Are Construction Costs In Kenya Going Up or Down?
Sorry to say, but the construction rates in Kenya have been rising steadily in recent years. In 2022, for example, building developers will be spending more per square metre than they did in 2021.
This is largely due to the surge in steel prices, the current global rush for raw materials, Kenya’s high energy costs, the recent tax hikes, as well as the higher-than-average inflation rates that we’re now experiencing.
How Much Have Kenya’s Construction Costs Increased In 2022?
On average, the construction costs in Kenya have increased by 5.02% in 2022.
But, don’t get us wrong – the change is not uniform across all the building categories and regions.
Putting up a standard bungalow, for instance, will now cost you 3.59% more per square metre in Nairobi, while developers in the Coast are spending 2.37% more, and the Western/Nyanza region is registering a hike of 1.52%.
How Much Does It Cost To Build A Three Bedroomed House In Kenya?
The cost of putting up a typical 3-bedroomed house in Kenya ranges from Kshs. 3.46 million to Kshs 5.16 million.
We’ve computed this based on the presumption that a conventional three-bedroom residential bungalow has a plinth area of about 100 to 140 square metres.
The construction costs per square metre, on the other hand, currently average at Kshs 34,650 in the Nairobi/Central region, Kshs 36,250 in the Coast region, and Kshs 36,850 in Nyanza/Western.
How Much Does It Cost To Build A Four Bedroomed House In Kenya?
Constructing a standard 4-bedroomed house in Kenya would cost you at least Kshs 5.2 million, and it can stretch to as much as Kshs 14.3 million.
To break it down, the minimum you can expect to spend per square metre in 2022 is about Kshs 34,650 – for a standard 4-bedroomed bungalow in Nairobi – while the maximum would be about Kshs 57,300 per square metre, which should be enough to build a luxurious 4-bedroomed maisonette in the region of Western/Nyanza.
As for the total plinth area, you can expect all the facilities and rooms in a typical 4-bedroomed house to add up to about 150-250 square metres.
How Can You Build Cheaply In Kenya?
While many mistakenly try to minimize their construction costs through cheap building materials and semi-skilled labour, the trick to building cheaply in Kenya is prioritizing value over price.
Instead of obsessing about the prices of items and the fees charged by professional consultants, you might want to focus on the corresponding value and cost optimization opportunities.
If you choose to bring in a bonafide construction project manager, for instance, you’ll eventually be able to minimize the construction costs through:
- Extensive pre-construction planning and budgeting.
- Technical and financial feasibility analysis.
- Thorough assessments of the project requirements.
- Accurate cost forecasting and value assessment.
- Strategic tender management and contractor evaluation.
- Adequate techno-commercial evaluations.
- On-site contract administration.
- Close coordination and supervision of all the procurement processes.
- Full-time tracking of all the works and expenditures.
- Timely risk identification and mitigation.
- Adequate material testing.
- Schedule planning and tracking.
- Quality assurance.
- Change order management.
And so much more. (Here’s the full breakdown of all the services you’ll be getting from your construction project management firm.)
So, get in touch with us today to learn how your construction project can achieve the highest possible quality at the lowest possible cost.