• Experts warn some construction projects be cancelledas a result of increased fuel prices.
• Drag on national projects,some projects may never be built.
Image: JOHN KAMAU
Higher fuel costs paint grim future for the real estate industry that has been struggling due to the economic turbulence buffeting the country.
Experts warn some construction projects might end up stalling or will never be built.
Affordable housing, manufacturing, agriculture and healthcare will also be hit.
President William Ruto's flagship projects could be affected.
Materials such as building stones, taps, plywood, ballast among others will definitely skyrocket in price. Transportation of the materials, which constitute a huge percentage of construction, will similarly increase in cost. That makes construction an expensive affair, even mission impossible
To keep up with the rising costs, landlords are also likely to increase rents.
Industry figures said given the general economic uncertainty, consumers will limit their spending to basic commodities due to reduced purchasing power.
Real estate will suffer from reduced ability to purchase land and housing.
Engineer Joseph Muturi from Precise Civil Engineering Limited, said the cost of production of materials has already increased following high prices imposed by the Energy and Petroleum Regulatory Authority (Epra). This deepens the problems facing the industry since the Covid-19 period.
He urged the government to consider creating incentives for the industry, including reducing taxes and lowering prices of construction materials.
He spoke during the launch of MilikiSpace Properties Ltd, the first affordable housing project at Thindigua village in Kiambu county.
Muturi said some developers have been taking shortcuts by using substandard materials to reduce housing construction costs and warned of possible building collapses in Kiambu.
Martin Njoroge, CEO for MilikiSpace Properties Ltd, however, urged Kenyans to adjust to the economic situation, saying the effects of increased fuel prices will eventually stabilise.
“We are looking at everything going up with the fuel levy having been increased. The prices for different commodities will go up but we still believe the need for affordable housing remains uninterrupted and the time to invest is now because life might not get any cheaper in the near future,” Njoroge said.
While praising the government’s affordable housing agenda to stir up the economy affecting all Kenyans positively, Njoroge said the sector will rebound once the economic uncertainty subsides.
“The 1.5 per cent taxation for workers to support the housing development is important as housing is the first step towards wealth. We support the government and because it cannot do this alone, private developers must come in,” the developer said..
The CEO said the 14-floor apartment with 392 housing units at Thindigua will be done in two years as the company eyes new housing projects around the country.
The company’s managing director, Milka Wambui Ndegwa, urged Kenyans to invest now when the economic situation looks uncertain, expressing optimism the government’s housing agenda is realisable with good partnerships between the public-private firms.