Nairobi County Offers Best Infrastructural Investment Opportunities Compared to Other Counties

Nairobi County offers the best investment opportunity in terms of infrastructure supply due to the presence of relatively good coverage of all infrastructure sub-sectors, in comparison to other counties.

This is according to the Nairobi Metropolitan Area Infrastructure Report 2018 by Cytonn Investments which stated that the investment opportunity within Nairobi County is in areas along Ngong Road, which is currently being upgraded, such as Kilimani, Race Course, and, Karen.

These areas were said to have relatively sufficient water and sewerage coverage while also being in close proximity to the Jomo Kenyatta International Airport (JKIA) and Wilson Airport.

Nairobi Metropolitan Area has a relatively high population growth rate of 3.1 percent against the national and global average growth rate of 2.5 percent and 1.2 percent, respectively, as at 2018, which continues to outstrip infrastructure and service capacity thus creating demand for the same as required to serve the growing population.

Nairobi County has the highest population density at 6,474 people per SQKM and growing at 4.1 percent p.a, followed by Kiambu County with a density of 818 people per SQKM and growing at 2.8 percent p.a, according to the Kenya National Bureau of Statistics (KNBS).

For the Nairobi Metropolitan Area, the total budget allocation made to counties continues to increase, growing by a 6-year CAGR of 73.1 percent, and a 2.9 percent increase from 44.4 billion shillings allocated in the 2017/2018 budget to 45.7 billion shillings allocated in 2018/2019. This has resulted in continued funding of projects at Kenyan County level, including infrastructural projects.

The county’s allocation is as illustrated below: 

In spite of the factors boosting the sector’s growth, development of infrastructure also faces various constraints including huge capital outlay required to develop infrastructural projects, which has continued to discourage potential investors especially from the private sector and encroachment and illegal occupation of land meant for infrastructural projects resulting in delay of projects and escalated project completion costs.

Vandalism of facilities, such as petroleum products pipeline, electricity transformers, and fiber optic lines, has resulted in high maintenance costs and capital loss, thus crippling infrastructural development together with Lengthy legislative requirements, which include elongated processes of approval discourage investors from taking up infrastructural projects, as they are time-consuming and expensive.

Cytonn notes that the presence and quality of infrastructure, that is, transportation and utilities, is one of the most important factors influencing real estate investments, and the country’s economy as a whole.

The real estate firm expects the infrastructural development to remain a top priority for the government in line with its Big Four Agenda to improve the housing deficit and scale up the manufacturing sector.

The report, however, notes that due to the current unfavorable financial environment, a rise in private investments is expected into this segment of the economy as a way of bridging the financing gap, especially in the energy and road sectors, which provide a ready niche for private investors.