Private investors continued to hold back on fresh projects into the first half of this year amid persistent jitters over the State’s multi-billion-shilling affordable housing programmes.
This has seen the value of residential buildings approved for construction in Nairobi alone drop by Sh22.7 billion in six months, revealing the scale of reduction in investment into the sector.
With the State keen on constructing thousands of houses across the country under the affordable housing programme (AHP), investors have developed cold feet and are slowing down on financing in residential houses, data from the Nairobi City County shows. Between January and June 2025, residential buildings valued at Sh72.2 billion were approved for construction in the capital, a drop from Sh94.9 billion building plans approved during a similar period last year, the data shows.
“The total value of building plans approved by Nairobi City County increased from Sh7.5 billion in May 2025 to Sh13.7 billion in June 2025,” the Kenya National Bureau of Statistics (KNBS) says.
“Over the same period, the value of non-residential approvals more than tripled from Sh0.7 billion to Sh2.5 billion, while residential building plan approvals increased by 65.6 per cent to Sh11.2 billion,” it added.
The Mukuru Affordable Housing project in Nairobi in this photo taken on December 14,2024.
Photo credit: File | Nation
The data by KNBS shows that the residential building plans approved for construction by Nairobi during the six months to June 2025 were the lowest by value, over similar periods since 2022.
Between January and June last year, Nairobi approved Sh94.9 billion residential building plans for construction, up from Sh79.8 billion the previous year. During a similar period in 2022, the county had approved Sh63.6 billion plans.
The trend in the construction of residential buildings, however, is being witnessed even as growth is registered in the commercial buildings sector.
Between January and June 2025, commercial building plans valued at Sh19.8billion were approved by the county, up from Sh18 billion over a similar period last year.
Overall, building plans approved for construction by the county reduced from Sh112.9 billion from January to June 2024, to Sh91.9 billion over the same period this year.
This means that the entire reduction in the value of approved building plans was linked to residential buildings.
In March, the Parliamentary Budget Office (PBO) warned that the government’s focus on AHP was affecting activities in the private construction sector.
The programme started in September 2022, and State House said over 250,000 jobs had been created by June.
The Makasembo Housing Project on May 29, 2025, marking a milestone in Kisumu’s affordable housing journey.
Photo credit: Alex Odhiambo | Nation
“The anticipated active role of public investment in the construction industry may have impacted the private investments in the sector, thereby reducing the overall contribution of the sector to the GDP, as well as a reduction in credit to the private sector for the building and construction sector,” the PBO said.
A July survey by the Central Bank showed that the building and construction sectors were among those that commercial banks anticipated demand for credit from.
The CBK’s market perceptions survey also showed that in the construction sector, 80 per cent of companies have no plans to employ more workers, compared to the numbers they had last year.
The government indicates that there are over 150,000 houses currently under construction under the AHP across the country, out of which 11,000 have been completed.
“We have 200 sites of affordable housing going on in Kenya as we talk. This month, I will again be giving keys to another 5,000 Kenyans right here in Nairobi as part of that programme, both for social and affordable housing,” President William Ruto said last week.
