Africa-Press – Kenya. Kenya’s real estate developers and investors are exercising increased caution on new projects ahead as the country election fever picks up ahead of 2027, according to Knight Frank.
The consultancy and property management firm, says the sector has shifted decisively from expansion to consolidation, with most players opting to complete existing developments and manage risk rather than commit capital to new builds.
The trend reflects rising political uncertainty as the country edges closer to the 2027 elections, a period historically associated with subdued private investment.
Data from the Knight Frank’s latest market update shows a stark divergence between construction activity and new project initiation.
In the review period cement consumption rose by 21 per cent year-on-year in the first eleven months of 2025, signalling robust activity on ongoing sites.
In contrast, the value of approved building plans in Nairobi City County fell sharply by about 24 per cent over the same period, with residential approvals declining even further by 27 per cent.
“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,” said Knight Frank Kenya senior research analyst Charles Macharia.
“Developers and investors are strategically completing current inventories, indicating a mature response to both global and local uncertainties.”
However, the property firm holds that the broader economic backdrops like lower interest rates and stable shilling have improved compared to previous years.
Yet Knight Frank notes that these gains have not translated into renewed appetite for speculative development.
Instead, investors are adopting a “wait-and-see” approach, wary of election-related disruptions, fiscal pressures and lingering global volatility.
The result is a market focused on absorbing existing stock rather than adding new supply.
This caution is evident across multiple asset classes. In residential real estate, price and rental growth moderated in 2025, while developers increasingly prioritised finishing ongoing projects.
Although demand remains resilient in master-planned communities and high-quality apartments, particularly from diaspora buyers and high-net-worth individuals, new launches have become more selective and tightly aligned with proven demand fundamentals.
The report shows that office and retail markets have shown signs of recovery, but here too, expansion is measured.
Prime office occupancy in Nairobi improved to over 81 per cent by December 2025, driven largely by a “flight to quality” as tenants gravitated toward well-located, Grade A buildings.
However, most of the significant office development pipeline is now scheduled for delivery after 2027, reflecting developers’ preference to time completions beyond the election period.
Retail growth has been sustained mainly by supermarket chains and neighbourhood centres, rather than large regional malls. Developers remain cautious, responding to past oversupply and pressure on consumer spending by limiting new projects to formats with clear tenant demand.
Looking ahead, Knight Frank expects 2026 to be characterised by disciplined execution rather than aggressive growth.
“The year 2026 will be a year for disciplined execution and strategic positioning. The markets rewarding quality, sustainability and clear demand fundamentals will thrive, while those chasing speculative growth will pause,” said Knight Frank Kenya chief executive officer Mark Dunford.
Affordable housing, industrial real estate within Special Economic Zones, and alternative assets such as data centres are expected to remain relative bright spots.
These segments benefit from targeted policy support, institutional capital and long-term structural demand, insulating them somewhat from short-term political cycles.
