Global Conflict Shockwaves: How the Israel–Iran–USA War Could Reshape Real Estate Markets in Kenya

The escalating tensions involving Israel, Iran, and the United States continue to send ripples through the global economy, with the real estate sector among the most exposed. While the full impact is already evident in global markets, in Kenya, the effects are yet to be fully felt, though early warning signs are beginning to emerge, particularly within the energy sector.

Globally, the conflict has driven a sharp increase in oil prices due to supply uncertainties in the Middle East. This has triggered a chain reaction across industries, especially real estate, which depends heavily on energy for transportation, manufacturing, and construction processes. Rising oil prices have led to increased costs of building materials, logistics, and project execution. At the same time, global supply chains have been disrupted, with higher freight charges and delays affecting the availability of critical construction inputs such as steel, cement additives, finishes, and mechanical equipment.

These pressures have resulted in construction cost inflation across many regions, forcing developers to either increase property prices or slow down projects. Additionally, global inflation concerns have kept interest rates elevated, making financing more expensive for both developers and homebuyers. The strengthening of the US dollar has further compounded the situation by weakening emerging market currencies, thereby increasing the cost of imports and external debt.

In Kenya, the full impact of these global shocks is still unfolding. However, early signs are already visible, particularly in the fuel market. Some fuel stations have started experiencing supply pressures and price anxiety, signaling the beginning of cost transmission into the local economy. Given Kenya’s reliance on imported petroleum products, any sustained increase in global oil prices will quickly translate into higher local fuel costs.

If the conflict persists and a peace truce is not reached soon, several likely impacts may materialize in Kenya’s real estate sector. Fuel prices are expected to rise further, increasing transportation and logistics costs for construction materials such as cement, steel, and ballast. Imported construction materials will become more expensive and potentially scarce, leading to project delays and cost overruns. Construction material prices, especially for energy-intensive products, will surge, widening the gap between development costs and affordability. At the same time, exchange rate depreciation may intensify, increasing the cost of imports and foreign-denominated loans, while high interest rates will constrain access to financing and reduce housing unit uptake.

Despite these challenges, the situation also presents a nuanced outcome. Real estate may increasingly be viewed as a hedge against inflation and currency volatility, sustaining demand for land and property investments. Additionally, reduced affordability may push more households into rental housing, supporting rental demand and yields.

To navigate these emerging risks, Kenya will need to adopt a proactive and coordinated response. In the short term, stabilising fuel prices through targeted interventions and diversifying into renewable energy sources can help contain cost escalation. Over the medium term, promoting local production of construction materials and supporting alternative building technologies will reduce reliance on imports and enhance resilience. Managing exchange rate volatility through sound monetary policy, while boosting foreign exchange inflows, will also be critical.

Further, targeted support to the Affordable Housing Programme through subsidies, tax incentives, and flexible pricing frameworks will be necessary to sustain delivery amid rising costs. Expanding innovative financing models, such as rent-to-own schemes, and strengthening institutions like Kenya Mortgage Refinance Company can help maintain affordability and demand. At the same time, leveraging regional trade through blocs such as the East African Community can ease supply constraints and lower input costs.

In conclusion, while Kenya has not yet fully absorbed the impact of the Israel–Iran–USA conflict, the initial signs, particularly in the fuel sector, indicate that the effects are beginning to filter through. If the situation persists without a timely resolution, the country’s real estate sector is likely to face rising costs, constrained development activity, and reduced affordability. However, with the right mix of policy interventions, local capacity building, and innovative financing, Kenya can cushion the sector and enhance its resilience.

The global conflict is driving up oil prices, disrupting imports, increasing construction material costs, and weakening currencies, factors that collectively strain the real estate sector. In Kenya, the impact is still emerging, though early pressure is already visible in the fuel market. If the conflict persists, the country is likely to experience higher development costs, project delays, and reduced housing affordability. However, by stabilising fuel prices, promoting local production, managing exchange rates, and supporting housing programmes and financing mechanisms, Kenya can effectively navigate these challenges and sustain its real estate sector.

The writer is a Registered and Licensed Valuer, Registered and Licensed Estate Agent, and is a Full Member of the Institution of Surveyors of Kenya (M.I.S.K), Valuation & Estate Management Surveyors chapter.