Tariffs, Diaspora Remittances, and the Future of Real Estate Development in Kenya
Written by: Erick Ochieng Edited by: Linet Kanario
In a bold shake-up of international trade, U.S.A President Donald Trump has imposed a 10% reciprocal tariff on all Kenyan exports to the U.S.A. This is meant to have effects far beyond Washington. For Kenya, this new policy could mean a turning point, with potential repercussions extending to key sectors like real estate. Keep reading for a comprehensive discussion of what this could mean for industry giants like Centum Real Estate and explore how such global economic shifts are closely tied to rising construction costs and the role investment from the Kenyan diaspora.
Tariffs: A Macro Shock with Local Consequences
Tariffs which are taxes placed on imported goods, may seem like a far-fetched concept, but their impact is significant, especially in real estate. With U.S.A now imposing a 10% tariff on Kenyan exports, Kenya’s export market to U.S.A, which in the year 2024 valued at $737 million (Kenya Association of Manufacturers) is under pressure. Key Industries like clothing, coffee, and tea might be affected which would reduce Kenya’s foreign earnings hence straining its foreign exchange reserves. As the Shilling weakens, the cost of importing goods could rise, creating a subsequent effect across the sectors that depend on trade.
For real estate developers, this is more than just an economic headline, it is a potential threat to their income. Kenya relies heavily on imported construction materials such as steel, tiles, lighting, and finishes from countries like the U.S.A, China, and Turkey. Tariffs and currency depreciation often lead to an increase in prices which means high project costs hence reducing profit margins and eventually raising prices for homebuyers. As CS Lee Kinyanjui puts it, “This is a moment of global turbulence.” For developers, navigating this storm means recalibrating budgets, sourcing smarter and preparing for a new era of economic complexity.
The Construction Cost Factor
Rising import costs could drive up construction expenses by 10–20% causing delays as developers re-evaluate budgets and navigate procurement hurdles. This could cause a shift toward locally sourced materials and alternative building technologies (ABTs), although these solutions may not yet be scalable for high-end projects. For Kenyan developers working across both mid-income and upscale segments like Two Rivers, the challenge lies in staying affordable while managing climbing input costs. That means getting smart with cost engineering, negotiating savvy supplier contracts, and exploring bulk procurement models to stay ahead of the curve.
Diaspora Remittances: A Stabilizing Force
Despite economic turbulence at home, Kenya’s diaspora remains a financial powerhouse, continuing to fuel the economy with unwavering support. In fact, remittances hit an all-time high of USD 4.95 million (Ksh 5B) in 2024, accounting for over 3% of the country’s GDP, according to the Central Bank of Kenya. The U.S. stands out as the largest contributor, making up a whopping 51% of total inflows. A significant portion of these funds flows into real estate for;
- Investment purposes (e.g., serviced plots and villas for rental or resale)
- Legacy and homeownership (especially in gated estates like Kingswood)
With the U.S. imposing new tariffs and economic uncertainty on the rise, diaspora investors may start hitting the brakes. They are likely to become more cautious, seeking greater transparency, stronger guarantees, and clear value before committing their hard-earned money. For real estate players, this is a wake-up call, if you want to keep diaspora investment flowing, it’s time to build trust and show value like never before.
Centum Real Estate’s Strategic Position
As a leading developer of urban nodes in East Africa, Centum Real Estate has a track record of operating in different policy environments. Here are the ways in which it has been able to achieve this.
- Offering pre-serviced land and phased developments that help lock in costs and reduce exposure to volatile input prices
- Offering KMRC-backed mortgage options (with a fixed rate of 9.5% up-to 25-year tenure) that supports affordability even as inflation and tariffs pressure majority household budgets.
- Through strong project governance, clear title delivery, and consistent handover track records that enhance trust which is critical especially for diaspora buyers who invest remotely.
- Creative business models such as SEZ-based developments like Vipingo Model City come with tax incentives that cancel out some cost pressures and boost investor confidence.
Resilience Through Strategy
The tariffs imposed by the U.S on over 185 countries in the world are a market signal. For Kenya’s real estate market, especially for big players like Centum Real Estate with regional ambitions, success will depend on adaptability, that is, adjusting pricing models, protecting margins, and most importantly maintaining client confidence. The developers who maintain transparency, offer long-term value, and build trust with diaspora and local buyers alike will remain resilient.
References
U.S. slaps Kenya with 10% export tariff
Kenya negotiating trade deal with US in wake of Trump tariffs
Kenya Hit with 10% U.S. Tariff: Is it an Opportunity or a Jolt?
