KENYA Law and Practice Contributed by: Anne Kinyanjui and Bonface Abuya, DLA Piper Africa, Kenya (IKM Advocates)
Affordable Housing Scheme (AHS) Affordable housing remained one of the most visible themes in the Kenya real estate market. The Afforda - ble Housing Regulations, 2025, which came into effect in July 2025, operationalise parts of the Affordable Housing Act. Project delivery has continued across a number of counties, with official updates show - ing that, in early 2026, more than 260,000 units were under development countrywide. In December 2025, approximately 4,500 units were handed over under the Mukuru Affordable Housing Project. Private developers are also investing in affordable housing products independent of the AHS, including TSAVO, HIS Kenya and Acorn Holdings Limited. Significant Real Estate Deals Over the Last 12 Months Key projects and deals include the following. • A KES65 billion (approximately USD500 million) deal to develop commercial and residential units at Tatu City SEZ. • In the REIT market, ALP Industrial USD REIT was licensed in August 2025 and listed on the Nairobi Securities Exchange in 2026. The TRIFIC Green USD income REIT was licensed in September 2025, and the REITS Association of Kenya spon - sored the REIT incubator initiative, aimed at nurtur - ing assets for future listings. • The International Workspace Group significantly expanded its flexible office locations in Kenya, responding to growing demand for hybrid and flex - ible work arrangements. • In the hospitality sector, G Marriott International launched the Ritz-Carlton safari camp in Masai Mara and continues with plans to launch luxury safari camps under its Ritz-Carlton and JW Mar - riott brands. In addition, according to data from Knight Frank, an estimated 1,500 services apart - ment units and 2,000 new hotel rooms are under development; • Airtel Africa, through its data centre subsidiary Nxtra (Airtel Africa), broke ground in September 2025 on what is set to become East Africa’s largest data centre; and • in the retail sector, various malls in the neighbour - hood/community category were completed, such
as Beacon Mall Upperhill, OUR Mall Magadi Road, Waris Mall Ruai and Promenade Mall Westlands. Impact of Inflation Environment and 2025 Interest Rates In 2025, the Kenyan real estate market was affected less by fresh inflationary pressure and further interest rate increases than by the after-effects of the earlier tightening cycle. CBK progressively reduced the CBK Rate from 10.75% in February to 9% in December 2025, while commercial banks’ weighted average lending rates also trended downward. In practice, however, borrowing costs remained elevated enough to continue affecting affordability, leverage levels and project timing. Developers therefore tended to favour phased developments, prime and income-generating assets and refinancing or alternative sources of capital where available. CBK also announced the issuance of a revised risk- based credit pricing model anchored on the overnight interbank average rate (KESONIA), signalling a move towards greater pricing transparency and a more market-linked benchmark framework for debt going forward. KESONIA took effect from 1 September 2025 for all new variable-rate Kenya shillings loans and from 28 February 2026 for existing variable-rate Kenya shil - lings loans. Impact of Disruptive Technologies The following digital solutions have been adopted: • the digitisation and digitalisation of courts, not only reducing the time taken to file and process cases but also increasing transparency; • the continued rollout and use of the Ardhisasa platform has further embedded digital processing in land administration and land transaction work - flows, notwithstanding ongoing operational and technical challenges; • proptech solutions such as Airbnb, xPodd, virtual reality site visits and smart homes, which are popu - lar in Kenya; • technology-related real estate, the demand for which has also become more visible through inves - tor interest in digital infrastructure and data-centre related assets; and
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