Last year’s average building rates were Kshs 33,450 – Kshs 72,400 per square meter, which is equivalent to Kshs 3,135 – Kshs 6,785 per square foot, according to our Construction Costs In Kenya 2021 guide.

In Nairobi like in other major towns in Kenya, most of the dwellers tend to rent. Renting a house is quite expensive and everyone’s dream is to build their own home designed according to their preference.

Construction Costs in Kenya

How much does it take to own that house? This is one of the biggest questions at the back of the mind of most Kenyans who dream of building a home. Owning a residential property can be done in two ways; buying a ready-made home or constructing your own.

Being your own landlord has numerous advantages, particularly the ability to renovate and make changes as you see fit. A ready-made house is typically more expensive and deprives you of much-needed control over the surrounding conditions. That is why most people prefer to construct their own from the ground up.

Whether you are building from scratch or purchasing a pre-built home, you must be aware of the total cost throughout the process.

What is The Cost of Building a House in Kenya?

The cost of building a house in Kenya varies by town and is determined by the house design or floor plan as well as the materials used.

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It is critical to understand how much it will cost to build your dream home. You will be able to create a perfect house plan this way. For example, the cost of constructing a three-bedroom house in rural Kenya ranges between Kshs 1.7 million and Kshs 4.4 million, depending on the quality of the finishes. This is due to the lower labor costs in rural areas, as well as the availability of inexpensive locally available materials such as stones and sand.

To build affordably in Kenya, you must have a surveyed plot because this does not require you to pay for public services or other costs such as excavating, clearing bushes, or repairing extended drainage. Second, go to www.afrohouseplans.com to find a desirable house plan. Simple floor plans are simple and inexpensive to build.

For accurate budget estimates, you will need to hire a quantity surveyor from the Institute of Quantity Surveyors of Kenya. Here’s how to find out the average cost of building a house in Kenya.

Square Footage

The size of a house is also an important consideration because the cost of construction per square meter for a smaller home is often higher than for a larger home. When building a larger home, the cost of expensive items such as a bathroom or kitchen is spread out over more square footage.

Examine a newly built house that is similar to the one you want. Take the cost of the house, deduct the cost of the land, and divide the total by the size of the house.

If the house is worth Kshs 75 million and the land is worth Kshs 45 million, the construction cost is Kshs 30 million.

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House Qualities

The internal and external features of a house are important determinants of construction costs. The cost of building a house in Kenya is heavily influenced by the quality of the finishes.
Reducing the size and number of windows, for example, can lower your building costs, whereas vaulted ceilings and steep roof pitches can significantly raise them.

In Kenya, the average cost of construction is around Kshs 40,000 per square meter for a modest city dwelling, while a high-end home can cost more than Kshs 70,000 per square meter.

Nairobi/Central Region’s Construction Costs

Residential Projects in Nairobi – Building Costs Per Square Metre:

  • Standard Bungalow: Kshs 34,650 Per Square Metre.
  • Middle-Class Maisonette: Kshs 38,500 Per Square Metre.
  • Luxurious Bungalow: Kshs 48,450 Per Square Metre.
  • Luxurious Maisonette: Kshs 55,400 Per Square Metre.
  • Standard Low Rise Apartment Block: Kshs 38,200 Per Square Metre.
  • Standard High Rise Apartment Block: Kshs 45,700 Per Square Metre.
  • Luxurious Apartment Block: Kshs 57,400 Per Square Metre.

Commercial Projects in Nairobi – Building Costs Per Square Metre:

  • Standard Low-Rise Office Block: Kshs 42,900 Per Square Metre.
  • Standard High-Rise Office Block: Kshs 53,550 Per Square Metre.
  • Luxurious High-Rise Office Block: Kshs 74,000 Per Square Metre.
  • Business Park: Kshs 51,600 Per Square Metre. 

Retail Projects in Nairobi – Building Costs Per Square Metre

  • Small Scale Shopping Centre: Kshs 39,000 Per Square Metre.
  • Standard Urban Shopping Complex: Kshs 47,600 Per Square Metre.
  • All-Inclusive Shopping Mall: Kshs 52,700 Per Square Metre.

Industrial Projects in Nairobi – Building Costs Per Square Metre

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  • Double Storey Factory: Kshs 37,800 Per Square Metre
  • High Tech Factory/Lab: Kshs 60,500 Per Square Metre.
  • Warehouse: Kshs 36,000 Per Square Metre.
  • Cold Storage Centre: Kshs 38,700 Per Square Metre.
  • Administration Office: Kshs 41,400 Per Square Metre.

Why It Costs More To Build Than Before

Construction costs in Kenya have recently risen due to the following five primary factors:

  • Rising steel prices.
  • Inflation
  • Global rush for raw materials.
  • Taxation increases
  • High energy prices

Rising Steel Prices

If there is one construction material whose prices have skyrocketed, it is steel.

Back in 2020, at the height of the COVID-19 pandemic, global steel rebar prices averaged around $450 per tonne. Then, as the world began to recover in 2021, prices skyrocketed, reaching as high as $850 per tonne by mid-year.

They did, however, fall subsequently, albeit not significantly. The average price in the first quarter of 2022 was $750 per tonne, which was 66% higher than the price in 2020.

Of course, you can blame it on the recent increase in global demand. According to the World Steel Association (WSA), demand will increase by 4.5% in 2021, up from 0.1% in 2020.

Another factor that will keep prices high is China’s continued cancellation of steel export tax rebates.

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China, which accounts for 57% of global steel production, had a tax rebate program that refunded 13% of the VAT charged to iron and steel exporters. However, the policy was canceled in mid-2021 in order to compel the steel industry to support the country’s record-high domestic demand.

As a result, importing steel from China is now more expensive, and the trend is expected to continue through 2022.

Inflation

Just as Kenya was beginning to recover from the inflationary spikes of 2017, the COVID-19 pandemic arrived and turned the tables.

Kenya’s average inflation rate fell from 7.99% in 2017 to 4.69% in 2018, then stabilized at around 5.2-5.4% in 2019 and 2020.

However, in 2021, the global rush for raw materials, combined with rising dollar rates, pushed annual inflation above 6%, with some months experiencing as much as 6.91%.

This, of course, has had a significant impact on Kenyan construction costs, as consumer prices have recently increased by an average of 0.3% to 0.9% per month.

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Although the country’s inflation rate fell to 5.4% in January 2022, the latest FocusEconomics Consensus Forecast predicts that it will rise to an average of 6.1% by the end of the year.

As a result, Kenya may see a steeper increase in building costs than many other countries by 2022.

Global Rush For Raw Materials

Steel isn’t the only building material we’ve imported from China. The majority of domestic manufacturers source raw materials from Chinese manufacturers, while hardware stores import the majority of their stock from China.

You could argue that, over time, this has helped to stabilize Kenya’s construction costs, as Chinese manufacturers are known to offer some of the best bargains.

However, in mid-2021, we saw a rather radical paradigm shift, as Chinese exporters began raising their prices exponentially in response to the post-lockdown global rush for raw materials.

The Hong Kong Export Price Index, which serves as a reliable indicator of China’s export rates, shows that prices have been rising since last year.

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They increased by 8.56% between February 2021 and November 2021, for example, and show no signs of slowing down.

As a result of Kenya’s continued reliance on Chinese raw materials and products, the construction industry will remain mired in the midst of the crisis. As a result, developers will have to bear higher construction costs for the foreseeable future.

Taxation increases

Another factor contributing to Kenya’s rising construction costs in 2022 is recent tax increases, which can be attributed to the country’s ballooning debt situation.

The government is under increasing pressure not only to pay its massive debts but also to restructure its monetary policies in order to maintain its overall creditworthiness.

Loans from the IMF, for example, are forcing Kenya’s government to implement tax reforms in order to improve the country’s tax-to-GDP ratio. More specifically, the National Treasury is aiming for a 16.4% ratio in the fiscal year 2022, up from 14.3% in FY18/19.

That, of course, translates into a slew of tax increases, the effects of which are already being felt in Kenya’s construction industry.

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The 2020 Tax Laws (Amendment) Act kicked things off by introducing new fees for both manufacturers and consumers.

One of its most notable features was the repeal of the 30% electricity rebate that businesses had been enjoying thanks to the 2018 Finance Act. This meant that manufacturers would have to deal with the high cost of power starting in 2021, a burden that is currently being passed on to builders via recently revised prices for various construction materials.

Paint manufacturers, for example, are now subject to a 10% excise tax on imported resin, in addition to a 16% VAT on petroleum-based ingredients.

The Kenya Revenue Authority then began making what it calls an inflation adjustment on selected duty rates near the end of 2021. As a result, it now reserves the right to freely increase some excise tax charges by 4.97%, contributing to a further increase in Kenya’s construction costs in 2022.

High energy prices

Domestic manufacturers must contend with rising energy costs in addition to importing raw materials at exorbitant rates.

Electricity billing rates alone have risen dramatically in recent years, putting Kenya among the countries with the highest energy costs in the world.

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KPLC was charging manufacturers an average of Kshs 19.28 per kWh by mid-2021, which was significantly higher than the global average of Kshs 14.25.

Tanzanian businesses, on the other hand, pay about Kshs 11.61 per unit, while the DRC charges Kshs 10.97, Rwanda Kshs 10.71, Nigeria Kshs 10.53, and South Africa Kshs 9.08.

The problem is exacerbated further by rising fuel prices, which are expected to reach an all-time high in 2022. Kenyans are now paying Kshs 131 for a liter of petrol, up from Kshs 110 when we were compiling the 2021 Construction Costs Index.

And it’s about to get worse, as the Treasury’s Fuel Subsidy Fund is said to be nearly depleted. As a result, expect prices to rise by up to 16% in the near future, with the impact being directly and indirectly passed on to Kenyan building costs in 2022.

How Much Does It Cost To Build A Three Bedroom House In Kenya?

In Kenya, the cost of constructing a typical three-bedroom house ranges from Kshs. 3.46 million to Kshs. 5.16 million.

We calculated this using the assumption that a typical three-bedroom residential bungalow has a plinth area of 100 to 140 square meters.

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The average construction cost per square meter in Nairobi/Central is currently Kshs 34,650, Kshs 36,250 in the Coast region, and Kshs 36,850 in Nyanza/Western.

How Much Does It Cost To Build A Four Bedroom House In Kenya? 

A standard four-bedroom house in Kenya will set you back at least Kshs 5.2 million and can go up to Kshs 14.3 million.

To break it down, the minimum you can expect to spend per square meter in 2022 is around Kshs 34,650 – for a standard 4-bedroomed bungalow in Nairobi – while the maximum would be around Kshs 57,300 – for a luxurious 4-bedroomed maisonette in the Western/Nyanza region.

In terms of the total plinth area, a typical 4-bedroomed house will have around 150-250 square meters of facilities and rooms.

FAQs

How Much Does It Cost To Build A Three Bedroom House In Kenya?

In Kenya, the cost of constructing a typical three-bedroom house ranges from Kshs. 3.46 million to Kshs. 5.16 million.
We calculated this using the assumption that a typical three-bedroom residential bungalow has a plinth area of 100 to 140 square meters.

Conclusion

A home is a significant investment that should not be taken lightly.

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You can easily own your dream with proper research, careful evaluation, and financial analysis, especially with the many floor plans available at www.afrohouseplans.com. You’ve got halfway there thanks to this article.

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