Manufacturers of building materials have recorded double-digit sales, thanks to boosted fortunes from increased investments in the property market.
Makers of cement, galvanised iron sheets, steel products and paints have emerged the biggest beneficiaries of the property boom, recording the highest sales in recent years .
Firms such as East African Portland Cement Company (EAPCC), iron sheet maker Mabati Rolling Mills and paint firm Crown Berger have recorded brisk business in the first half of the year, which they expect to hold for the rest of the year, a move that is set to raise their full-year earnings.
“Increased orders from the construction sector helped us grow sales by 20 per cent in the first half of the year,” said Rakesh Rao, the chief executive of Crown Berger.
Data from the Kenya National Bureau of Statistics also shows surging demand for cement and steel products –a signal that the red-hot property market is unlikely to cool off in the short term.
Production of galvanised roofing sheets, for instance, stood at 136,673 tonnes in the six months to June, growing by more than a third from 101,826 tonnes a year earlier.
Cement consumption stood at 1.4 million tonnes in the first five months of the year, compared to 1.1 million tonnes a year earlier, representing a growth of 19.2 per cent.
Demand for cement gained momentum from last year and is expected to help East African Portland Cement Company (EAPCC) regain its foothold in the profit territory after making a Sh292 million loss last year.
“The rising demand for cement has moved us to the profit territory in the quarter ended September,” Mark ole Karbolo, the chairman of EAPCC said in an earlier interview.
Construction is the fastest growing economic sector fuelled by availability of credit for investors seeking to meet pent-up demand for office and residential units, especially in urban areas such as Nairobi, Mombasa, Kisumu, Nakuru, and Eldoret.
The sector grew by 10.7 per cent in the first quarter, 10 points more than the 0.3 per cent growth a year earlier.
CBK figures show that real estate accounted for the single largest segment of loans or one third of the Sh1.2 trillion lent in the 12 months to February.
The raising of new funds and maturing of old loans in the past two years have seen banks seek to grow lending to the real estate sector where default levels have been dropping in recent years. Housing Finance, KCB, and CFC Stanbic are the biggest mortgage lenders in Kenya and have raised the stakes in recent months by offering 100 per cent financing and lower interest rates, among other attractions.
Analysts say the ongoing massive infrastructure projects are set to further open up more parts of the country to property developments, further spurriing new investments in the sector.
The property market has one of the highest returns on investments and both local and foreign investors have taken note of this fact, pumping billions of shillings into setting up office blocks and residential buildings.
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