Kenya's Developers Are Still Building, But They Have Quietly Stopped Starting New Projects

There is a strange split happening in Kenya's construction sector right now. Cranes are still moving. Cement is still being poured. And yet, behind that visible activity, something has quietly shifted.

According to Knight Frank Kenya's latest market update covering the second half of 2025, the value of approved building plans in Nairobi fell by approximately 24 percent year on year. Residential approvals dropped even further, by 27 percent. Data from the Kenya National Bureau of Statistics puts the total value of approved building plans in Nairobi at Ksh 201.3 billion in 2025, down from Ksh 221.6 billion in 2024. Residential approvals specifically declined from Ksh 170.7 billion to Ksh 155.8 billion over the same period.

At the same time, cement consumption rose 21 percent year on year in the first eleven months of 2025.

Those two figures together tell the story precisely. Developers are finishing what they started. They are not starting much that is new.

Knight Frank Kenya senior research analyst Charles Macharia described the situation plainly. "The macroeconomic stabilisation in late 2025 has provided a firmer foundation for business planning. However, the sharp decline in building approvals signals a market in consolidation mode. Developers and investors are strategically completing current inventories, indicating a mature response to both global and local uncertainties."

The driver behind that caution is not hard to identify. Kenya's 2027 general elections are approaching, and election cycles in this country have a documented history of cooling private investment. Developers who have watched previous cycles play out are making a calculated decision to sit on capital rather than commit it to new projects whose completion timelines would run directly through the election period.

This is not panic. It is positioning. Knight Frank Kenya chief executive officer Mark Dunford framed it directly when he said 2026 would be a year of disciplined execution and strategic positioning, adding that markets rewarding quality, sustainability and clear demand fundamentals would thrive while those chasing speculative growth would pause.

The effect is visible across different asset classes. Prime office occupancy in Nairobi climbed to over 81 percent by December 2025, driven by a flight to quality as tenants moved toward well-located Grade A buildings. But most of the significant office development pipeline has been pushed to after 2027, with developers deliberately timing completions beyond the election window. In retail, growth has been sustained mainly by supermarket chains and neighbourhood centres rather than large regional malls, as developers respond to past oversupply and weak consumer spending by limiting new projects to formats with confirmed tenant demand.

The segments still attracting fresh capital are those with structural backing that sits outside the election cycle. Affordable housing, supported by multilateral financing and the Housing Levy, continues to draw developers. Special Economic Zones, particularly Tatu City, attracted over Ksh 65 billion in new foreign direct investment commitments during the review period. Data centres and industrial assets are also holding up, reinforced by Kenya's positioning as East Africa's digital infrastructure hub.

What this means for the broader construction sector is a period of reduced new work coming through the pipeline. The sites already under way will keep running. The material suppliers, contractors and subcontractors serving those sites will feel relatively little disruption in the short term. But when those projects wrap up and the next cycle of approvals has not yet been filed, the gap will show.

Kenya's economy grew by an estimated 4.9 percent in 2025 and is projected to maintain a similar rate in 2026. The shilling has stabilised. Lending rates have come down. On paper, the conditions for investment are better than they were two years ago. The problem is that in an election year, paper conditions and actual behaviour rarely match.