The country continues to experience a reduction in cement consumption indicating a tough growth for the construction industry during the year.
Consumption of cement dropped from 466,909 metric tonnes in August 2018 to 456,473 metric tonnes in September 2018, according to the recent economic survey report by Kenya National Bureau of Statistics (KNBS).
This was also matched by a decline in the amount of cement produced to 460,546 MT from 473,861 MT between the two months.
The report also showed a 3.67 per cent decline in cement use in the first quarter of 2018/2019 financial year. Cement that was used in the three months ending to September 2018 declined to 1.3 MT compared to the 1.4 MT in similar period in 2017.
The trend marks a slowdown in the construction industry from consistency evident since 2017 that saw a total of 5.7 million tones consumed. This represented a 9.5 per cent decline from 6.3 million tones consumed in 2016.
The decrease in production and consumption of cement and may be an indicator that the construction sector is still struggling with the current oversupply in the market and low transactions have made developers hesitate to commence new-builds.
In a report by Cytonn Investments released in September, the Nnairobi Eastlands and Satellite Towns such as Kitengela, Kiambu and Rongai was the worst performing submarket to investors in real estate with an average yield of 6.6 per cent, attributed to the low rent of Sh124.5 per square foot. This was 30.4 per cent lower than market average at Sh178.9 per SQFT charged on the spaces.
However, markets including Westlands, Kilimani and Ngong road performed better with an average return of 10.78 per cent.
The government’s Big Four plan for development which by 2022 is expected to support the construction of at least 500,000 affordable houses.
Consequently, in its budget for the financial year 2018/19, the government has allocated Sh24.5 billion towards affordable housing and urban development.
