Real estate developers slowed the rollout of new projects last year, signalling the onset of positioning for political and economic uncertainty within the sector ahead of the 2027 general elections.
Data from the Kenya National Bureau of Statistics (KNBS) shows the total value of approved building plans in Nairobi fell by 9.2 percent to Sh201.3 billion in 2025 from Sh221.6 billion in 2024, pointing to a shrinking pipeline of new developments.
The decline reflects a shift in developer strategy, with investors holding back on fresh investments and prioritising the completion of ongoing projects rather than launching new ones.
Election cycles in Kenya historically trigger caution among investors, which usually leads to delays in decision-making and reduced capital commitments.
Monthly KNBS data, sourced from the Nairobi City County, illustrates the uneven nature of activity during the year under review.
While approvals briefly surged to Sh34.6 billion in March from Sh10.17 billion in January and Sh15.84 billion in February, it was followed by a slowdown in April (Sh10.2 billion) and May (Sh7.50 billion), highlighting the fragility of demand. The highest value of approvals was recorded in December when they hit a record Sh40.5 billion, but this was not enough to reverse the broader downward trend.
The data shows residential building approvals for the year dropped to Sh155.8 billion in 2025 from Sh170.7 billion in 2024, reflecting softer demand for new housing projects and a shift by developers toward completing existing units.
Non-residential approvals also fell to Sh45.5 billion from Sh50.9 billion over the same period, pointing to reduced expansion in commercial, retail, and office developments.
A report by property consultancy Knight Frank projects that the cautious stance is expected to persist into 2026, with developers largely shifting focus away from expansion.
“The real estate sector outlook for 2026 points to a year of absorption and completion,” Knight Frank wrote in a recent market review.
“Developers are expected to focus primarily on completing existing projects, while absorption of current stock is likely to improve as new supply remains constrained.”
The report notes that growth will be selective, with expansion strongest in segments backed by targeted funding, particularly affordable housing supported by multilateral financing and Kenya’s Housing Levy.
However, broader investment appetite is expected to remain subdued.
“Although the stabilisation of the shilling and easing interest rates should support developer and investor confidence in 2026, uncertainty surrounding the 2027 general election presents a material risk,” Knight Frank said.
As a result, the firm expects a “cautious, wait-and-see investment stance,” with limited new project launches and supply largely coming from the completion of developments underway.
