The Kenya National Bureau of Statistics (KNBS) has released the Second QuarterQ2:2023 GDP Report. Here are the real estate and related sectors performance highlights:

 

Real Estate Sector Records Marginal Growth On Both Q/Q And Y/Y Basis

The real estate sector recorded an improvement of 0.8% in its growth to 5.8% in Q2:2023 from 5.0% in Q2:2022. On a q/q basis, this was also an improvement by 0.6%. Notably the sector emerged as the third largest contributor to  GDP in the period under review, with the performance having been driven by various expansion activities by both local and international investors, development activities particularly in the residential, data centres, and industrial submarkets, and an increase in property rates:

Source: Kenya National Bureau of Statistics

 

The Construction Sector Records The Lowest Growth In The Last Five Years At 2.6%, As The Downward Trend Persists

The construction sector recorded the lowest growth rate ever in the last five years at 2.6% in Q2:2023, owing to a decline in construction activities emanating from persistent inflationary pressures. This has seen the overall cost  of construction rise since 2019. The major shift in new government social projects focus away from infrastructure developments has also contributed to the sector’s performance decline. Further, a closer look at cement consumption in the country in the last one year generally indicates stagnation, and a 1.5% decline on a q/q basis. 

Source: Kenya National Bureau Of Statistics

 

The Hospitality Sector Realizes A Decline, Despite Recording The Second Largest Expansion

The hospitality sector realized a 12.2% growth in Q2:2023. Despite recording the second largest expansion after the financial services sector, this is a decline from the 44% and  21.5% growth realized in Q2:2022 and Q1:2023, respectively. Supply chain disruptions and inflationary pressures on food and associated commodities have been key factors hampering the sector’s performance. For the period under review, the downward performance was also driven by a 6.1% decline in international arrivals, given that tourism contributes largely to the hospitality market performance.

Source: Kenya National Bureau Of Statistics

 

Overall, Kenya’s inflation rate is expected to persist for the rest of 2023. This in turn is expected to weigh down optimum activities particularly in the construction and hospitality industry, as well as the general real estate sector owing to increased operational costs. 

Estate Intel loves your feedback! Let the Insights team know what you think about Kenya’s real Estate and related markets performance by emailing insights@estateintel.com.

Subscribe to ei Pro to access affordable real estate data such as; sales rates, yields, supply drivers, and information on key real estate market participants who are active in the market.