Real Estate Sector Contributed 8.8 Percent To GDP in 2016
By Juma Fred / April 24, 2017
The real estate sector contributed 8.8 percent to Kenya’s GDP in the year 2016 according to the Economic Survey Report released by Kenya National Bureau of Statistics. This was an increase from 7.2 percent realized in 2015 with the overall contribution to GDP by the real estate standing at 8.4 percent in 2016 compared to 8.2 percent in 2015.
According to the survey, the following were the key highlights from the real estate sector in 2016:
- The estimated value of building works completed in Nairobi City County increased by 7.5 percent to 76.2 billion shillings in 2016 from 70.9 billion shillings in 2015, mainly driven by increased value of residential developments.
- The value of reported building plans approved in Nairobi increased by 43.3 percent to 308.4 billion shillings in 2016 from 215.2 billion shillings in 2015. The rise in building approvals was as a result of increased investment in real estate development and can be attributed to increased foreign investments and the government’s effort to provide both financial and non-financial incentives to the private sector to help alleviate the gap in housing, especially in the lower income market spectrum.
- The overall expenditure on roads construction, maintenance and repair increased by 38.3 percent to 156.5 billion shillings in 2016 from 113.2 billion shillings in 2015/16. More infrastructural development is likely to be witnessed especially as we are in the electioneering period, as it is a common campaign tactic for incumbent leaders seeking re-election. This will have a positive impact on real estate through opening up of areas for development, improved accessibility and the general increase in property value due to higher demand.
Real estate was one of the sectors which recorded an improved performance, together with storage, transport, and ICT.
The growth can be attributed to:
- high population growth and urbanization which drives real estate demand
- increased infrastructural development
- government incentives such as the provision of serviced land to developers, access to affordable financing, tax incentives and reforms of land administration.