Real estate jobs at stake as cement, metal prices rise
Workers at the affordable housing units at Pangani Redevelopment Site in Nairobi on January 21, 2022. There has been a steep rise in prices of steel bars, cement and other essential materials in the past four months.
What you need to know:
- An increase in the overall cost of building has seen some developers pause projects.
- Traders accuse local producers of conspiring to ensure imports are taxed heavily.
Kenya’s construction industry is in the grip of a sharp slowdown, following a steep rise in prices of steel bars, cement and other essential materials in the past four months.
The prices have been shooting up on a daily basis, causing an increase in the overall cost of building, and forcing some investors to halt projects, rendering thousands of workers jobless.
The cost escalation has deepened in recent weeks, with prices of iron sheets, nails, mesh wires and other commonly used materials increasing daily.
The sharpest increase has been recorded since January, with prices of some materials rising even more than once within a day, or doubling, and in some cases nearly tripling, compared to last year.
“Prices of steel reinforcement bars have increased by between 80 and 94 per cent. For instance, D8, which cost Sh460 six months ago, now sells at Sh830; D10, which cost Sh660, now costs Sh1,280; and D16, whose price by October 2021 was Sh1,760, now costs Sh3,230,” said Mr Evans Olemangeti, a hardware owner in Nairobi.
Real estate developers say prices of nails and cement have also risen by between 13 and 42.8 per cent within the past two weeks, with nails costing Sh200 from Sh140 per kilogramme and cement now going for above Sh600 per bag from between Sh530 and Sh550. The products are critical in any construction project, and any shift in their prices has huge implications in bills of quantities.
A visit to Kombo Munyiri Road, in Gikomba, the hub of hardware business in Nairobi, which hosts some of the biggest suppliers of construction materials, revealed that, as prices go up, businesses have seen the number of clients reduce, as developers develop cold feet and opt to hold out and watch how things will play out.
High costs of raw materials
At Mt Kenya Ceramics and Sanitary hardware, attendants said three-metre iron sheets that cost Sh680 by November 2021 now sell at Sh800, while the price of two-metre iron sheets has increased by 37.5 per cent from Sh400 to Sh550 over that period.
Another hardware said iron sheet prices have risen by Sh1,500 a bale compared to January; the cost TMT bars, which are used to reinforce concrete buildings, have almost doubled since February; cement has increased by Sh100 within a month; zed bars angle line by Sh500; and weld mesh by between Sh100 and Sh300 within a month.
“Everyday, when you go to buy these materials, you will find that the price is higher than the previous day’s. Prices of nails have been increasing by about Sh20 daily per kilo,” said an attendant at Mt Kenya Ceramics and Sanitary hardware.
The price of binding wire — used in tying bars at the joints — has increased from Sh3,000 to Sh3,600 in six months, hoop iron from Sh3,000 to Sh3,300 and BRC wire mesh — used to reinforce concrete at the floor level — by between Sh500 and Sh4,000.
While manufacturers are blaming the price volatility to high costs of raw materials, businesses accuse some “influential manufacturers” of conspiring to ensure imports are taxed heavily, even when they cannot produce enough.
Mr Olemangeti, who also manages construction sites, told the Sunday Nation that the rise in prices, together with a shortage of cement over the past few weeks, has seen the overall cost of construction almost double, compared to last year, with developers opting to pause projects.
“I have been managing five construction sites as a contractor, all of which have closed down within the past month. Each of these sites had employed about 20 people. Investors have developed cold feet since the rising prices have overshot initial quotations by huge margins,” he said.
