EXPENSIVE

The impact of rising cost of steel on housing development

Developers are increasingly finding themselves having to revise their budgets and dig deeper into their pockets.

In Summary

•As a result, housing in Kenya is going to be that much more expensive. With life becoming harder, we should not burden Kenyans who are looking for housing with costlier options.

•Developers are increasingly finding themselves having to revise their budgets and dig deeper into their pockets for their projects to proceed or scrub it altogether.

Mohamed Dahir
Mohamed Dahir
Image: Handout

The housing sector was just starting to shake off the negative effects of the Covid-19 pandemic that had brought the sector almost to its knees but the current rising cost of building materials, particularly steel and cement, is risking to undo all that progress.

2022 was to be the year of things getting back to normal. Unfortunately, a number of issues are threatening to deny us that. In housing, the price of steel and cement has been rising to astronomical levels.

Developers are increasingly finding themselves having to revise their budgets and dig deeper into their pockets for their projects to proceed or scrub it altogether.

As a result, housing in Kenya is going to be that much more expensive. With life becoming harder, we should not burden Kenyans who are looking for housing with costlier options.

While the war in Ukraine has undoubtedly contributed to these skyrockeMohamed Dahirting prices, it did not start it. Steel and cement prices have been increasing before the conflict.

In Kenya, several factors contribute to this. Among them is lack of adequate local capacity, depreciating Shilling and increase in cost of power.

The ban on scrap metal that was imposed at the beginning of the year, though understandable, is also having a profound negative effect on housing development.

The government needs to intervene. While I appreciate what it has done so far to the industry, I believe it can do more to help us deal with these challenges.

Some of the areas the government can look at include tax breaks, strengthening the local steel and cement industry and incentives to attract international players to set up local production facilities.

The rising price of fuel should be looked at as a matter of grave concern as it not only pushes housing development costs up but it also affects us all, in every sphere of our lives.

This will help, in among others, to reduce the amount of construction materials we import thereby lessening pressure on the Shilling and to create jobs. Ultimately, we will be more resilient as a country to global shocks.