Construction costs rise 20pc on skyrocketing cement prices

The consistent increase in the price of cement over the years has been a major contributor to the rising cost of construction in the country, which now stands at Sh54,730 per square metre for a simple bungalow.

In 2024, this figure stood at Sh48,750, an increase of 12.27 per cent.

In some instances, the price of construction has increased by almost 20 per cent, with the cost per square metre just shy of Sh100,000.

The stability of the shilling, while advantageous to the sector, has not been of much relief to cushion the increasing cost of construction.

However, the Architects’ Association of Kenya (AAK) in a report notes that stability of the shilling has provided predictability to the sector, especially for imported materials.

Kenya is a heavy importer of steel and iron, which are critical for the sector. In 2024, Kenya imported 1.1 million tonnes of iron and steel, according to the 2025 Economic Survey Report by the Kenya National Bureau of Statistics (KNBS).

The Status of the Built Environment report by AAK documents that the construction industry in Kenya has continued to experience moderate shifts in material and operational costs, driven by local economic conditions, fuel price movements, and inflationary pressures.

“However, unlike previous years, currency stability has played a significant role in cushioning construction costs in 2025,” the report says.

“Construction costs rose moderately in 2025, influenced by fuel prices and inflation but cushioned by currency stability.”

While data from the association shows an increase in fuel costs has also contributed to higher costs, prices of the commodity have been rather stable in the recent past at about Sh180 a litre for petrol and Sh170 a litre for diesel, the major fuel used by heavy machinery synonymous with construction works.

“Fuel remains a major determinant of project costs due to its influence on transportation equipment operation,” reads the Status of the Built Environment for 2025 by the Architects’ Association of Kenya (AAK).

The report notes that for the better part of 2025, petrol prices fluctuated modestly across the quarters: December 2024 at Sh180.66 per litre, March 2025 at Sh176.58, June 2025 at Sh174.63, September 2025 at Sh184.52 and December 2025 at Sh184.52 per litre.

“Although the first half of the year recorded slight reductions, the increase in the latter quarters raised haulage, logistics and plant operation costs,” the report says.

But while fuel prices witnessed a high and low over the period, cement prices have been on an upward trajectory.

Data shared in the report shows that in the last three years to December 2025, cement prices have gone up by almost 30 per cent.

As such, the price of a bag of cement has moved from Sh650 in December 2022 to Sh850 in December 2025. “These increases reflect higher production and energy costs, as well as general inflation,” the report says.

The report, which borrows figures from a study by Integrum Construction, notes that consequently, the cost of construction has increased across all building categories over the period.

The cost of constructing a standard bungalow has gone up to Sh54,730 per square metre in 2025, compared to Sh48,750 in 2025. This is a 12.7 per cent rise.

A middle-class maisonette now costs 11.28 per cent more per square metre to construct. The price has moved from Sh53,800 to Sh59,868.

“Higher-end units registered sharper escalation with luxurious maisonettes rising by 16.35 per cent from Sh84,000 to Sh97,730 per square metre,” the report says.

For standard low-rise apartments, the increase over the period was 13.9 per cent, from Sh60,435 per square metre to Sh68,837. Luxurious apartment blocks saw their construction costs climb by 15.53 per cent from Sh77,910 to Sh90,013 per square metre.

“These increases reflect higher material costs, labour adjustments, and the general inflationary environment within Kenya’s construction sector,” the report says.

“The trend demonstrates that residential development costs continue to rise, even with relative stability in the exchange rate.”

The report states that since December 2024, the shilling has remained relatively steady against the US dollar at Sh129 to the dollar, which is still the rate as of Wednesday.

“This stability has helped prevent sharp increases in the cost of imported inputs, offering the sector a rare period of predictability compared to fluctuations seen in 2023 and 2024,” the AAK report says.