Nairobi out of cheapest cities to construct buildings in Africa

Nairobi out of cheapest cities to construct buildings

A new survey by property firm Turner and Townsend dubbed International Construction Market Survey has revealed that it is cheaper to construct real estate projects in Nairobi compared to other African cities including Kampala, Rwanda and Johannesburg.

According to the report, the construction of either offices in Central Business District (CBD), a warehouse, hotel or a mall in Nairobi is Ksh.59,868 per square meter compared to Ksh. 89,913 in Kampala and Ksh.101,332 in Kigali.

However, the construction materials in Nairobi cost higher as concrete, plasterboard and copper cables retailing higher than in the south African city of Johannesburg.

Commenting on the survey, Neill Bulen global MD Turner and Townsend real estate said construction expenditure into new projects is still subdued, leaving a surplus of construction workers competing for fewer projects.

While construction in Nairobi is cheaper, return on investment is lower compared to the other cities. In Nairobi, building costs per square meter of internal area for CBD high-rise offices average at Ksh.101,046.40 compared to Ksh.128,251 for Johannesburg. High-rise apartments, a square meter of internal area costs Ksh.70,732 in Nairobi compared to Ksh.104,266 in Johannesburg.

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Despite high contribution of the construction sector towards Kenya’s economic recovery, the real estate market suffers from oversupply of high-end projects and heavy borrowing even before the COVID-19 pandemic that continues to derail its recovery.

In the continent, the pandemic disrupted the construction markets with different countries performing differently though most markets are running lukewarm or cold.

According to the report, the cold markets in Harare (Zimbabwe), Gaborone (Botswana) and Nairobi (Kenya) are expected to cool further while the more buoyant countries among those surveyed including Kigali (Rwanda), Kampala (Uganda), and Lagos (Nigeria) are expected to gain momentum with Rwanda leading the chats.

The survey says Tokyo, Hong Kong, San Francisco and New York City are the most expensive places to build in globally.

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