Building costs hit the roof as soaring cement prices erode gains from lower fuel costs
By John Otini, August 6, 2025The cost of building in Kenya edged higher in the second quarter of 2025, as gains from falling fuel prices were outweighed by a rise in cement and other key construction materials.
This trend could increase pressure on developers and contractors already grappling with tight margins in infrastructure and affordable housing projects.
Kenya National Bureau of Statistics (KNBS) data show that the overall Construction Input Price Index (CIPI) rose to 119.75 in Q2 2025 from 119.05 in Q1, reflecting a 0.59 per cent increase.
The agency attributes the climb mainly to rising material costs, with cement standing out as a major driver.
“This rise was mainly attributed to the increase in the materials indices, which rose from 125.90 to 127.39. Notable indices that rose were those of Concrete & Asphalts (2.86 per cent), Cement (2.63 per cent) and Steel & Reinforcement Bars (1.52 per cent),” the report stated.
While transport-related costs saw a mild reprieve with the transport, fuels and lubricants index falling 0.62 per cent, developers say the relief has been swallowed by the rising costs of core inputs like cement and sand.
Fuel prices dipped by 1.62 per cent in the same period, driven largely by global petroleum trends, offering some hope for logistics and equipment operation costs.
But that wasn’t enough to offset the overall cost burden in project execution.
In the housing sector, where margins are already slim, developers say the rising cost of cement and reinforcement bars is likely to slow construction timelines or force price adjustments, even for state-backed programs like the Affordable Housing Programme (AHP).
Cement and steel together account for a large share of material costs in housing, and their volatility has become a growing concern.
“It’s a paradox,” a Nairobi-based housing developer who asked not to be named said, adding: “The government has subsidised land and waived levies for affordable housing, but if material costs keep rising, those savings get eaten up fast.”
The Building Cost Index — which reflects the cost of materials, labour, transport, and equipment for general construction rose by 0.78 per cent to 119.52 in Q2.
KNBS noted that materials were the biggest contributor to the rise, particularly cement and lime (up 2.62 per cent), reinforcement bars (1.47 per cent), paving blocks (1.58 per cent), sand (1.44 per cent), and timber & wood (2.50 per cent).
“The main driver of the increase in materials indices were especially in the indices of Cement & Lime (2.62 per cent), Reinforcement Bars (1.47 per cent), Paving blocks (1.58 per cent), Sand (1.44 per cent), Timber & Wood (2.50 per cent), among others,” the report said.