Data from Nairobi City County, published by the Kenya National Bureau of Statistics (KNBS), shows the value of approved non-residential building plans rose 44.4 percent to Sh21.37 billion in the first three months of 2026 from Sh14.8 billion a year earlier.

The jump in commercial projects helped offset a slowdown in residential developments, whose approved value fell 10.3 percent to Sh41.06 billion from Sh45.77 billion during the same period last year.

During the review period, the total value of building plans approved in the capital increased by 3.1 percent to Sh62.44 billion, making it the highest figure since the opening quarter of 2023, when the value of the building pipeline was Sh63.78 billion.

The numbers point to a growing shift among private developers towards offices, warehouses, retail centres and industrial facilities at a time when the State is rapidly expanding its footprint in the residential housing market through President William Ruto’s Affordable Housing Programme.

Commercial projects accounted for 34.2 percent of the total value of approvals in the first quarter of 2026, up from 24.4 percent a year earlier and nearly four times the 9.3 percent share recorded in the first quarter of 2023.

While private developers appear to be shifting their focus towards commercial real estate, the government is accelerating investment in residential housing through the affordable housing programme.

Treasury Cabinet Secretary John Mbadi said the government had intensified implementation of the programme to address the country’s housing deficit while creating jobs and stimulating economic activity.

“Decent housing underpins social stability and economic productivity. Our Affordable Housing Programme not only provides safe and affordable homes to Kenyans, but also generates jobs directly in construction and indirectly across building materials and services sectors,” Mr Mbadi said in his Budget Speech on June 11.

The programme targets low- and middle-income earners through tenant-purchase schemes and affordable mortgages under the Boma Yangu initiative.

Mr Mbadi said 277,281 housing units were either under implementation nationwide or had been completed by May this year, underscoring the scale of government involvement in the residential construction sector.

The programme has also attracted more than one million registrations on the Boma Yangu platform, reflecting strong demand for home ownership and growing public confidence in the initiative, according to the Treasury.

Government spending data shows the affordable housing drive has become one of the fastest-growing areas of public expenditure since the introduction of the housing levy in July 2023.

The 2026 Economic Survey shows actual spending on housing nearly tripled to Sh79.03 billion in the financial year ended June 2025 from Sh25.49 billion a year earlier. The expenditure was almost nine times higher than the Sh9.13 billion spent in the 2022/23 financial year before the levy came into force.

At the same time, absorption of housing funds improved significantly, reaching 96.3 percent of the Sh79.03 billion allocation in the year ended June 2025, compared with 32.6 percent of Sh78.18 billion in the previous year.

“During the review period, expenditure on housing increased significantly, reflecting improved absorption of allocated funds and scaling up of affordable housing projects,” KNBS said in the Economic Survey.

The aggressive public-sector push into housing coincides with growing caution among private residential developers facing elevated construction costs, expensive financing and concerns over household purchasing power.

While residential projects still account for the largest share of Nairobi’s construction pipeline, the fastest growth is now coming from commercial developments, signalling a gradual rebalancing of investment away from privately financed housing and towards income-generating business properties.