As Kenya moves through 2026, several sectors are emerging as particularly promising for investors seeking a stake in the country’s expanding market.
Despite years of volatility, a stabilising macroeconomic environment, renewed foreign and domestic capital inflows, and government policy reforms are combining to make multiple sectors attractive.
As Knight Frank Kenya notes in its 2025 Market Update, “As a non-resource-rich country, Kenya has developed a broadly diversified economy that is not dependent on natural resource extraction. It serves as a key regional business hub, hosting numerous international NGOs and multinational corporations, with Nairobi supporting a large and growing workforce. These dynamics provide a strong foundation for a potentially vibrant real estate and construction sector.”
This raises the question: which hotspots hold the most promise as 2026 unfolds?
Real Estate
Real estate remains one of the most prominent investment hotspots for 2026.
Knight Frank, a global real estate consultancy and estate agency, notes that the prime residential market demonstrated stable growth during the first half of 2025, with the sales price index increasing by 5.63% year-over-year to June 2025.
Rental markets also showed consistency, with prime residential rents growing by 7.96 per cent year-on-year to June 2025, nearly matching the 7.98 per cent increase recorded in 2024.
“This sustained performance underscores continued demand from high-net-worth individuals and expatriates, particularly for well-priced properties in prime locations,” the report states.
The report further highlights the role of infrastructure in influencing real estate prospects.
“Where infrastructure by government is being delivered, we are seeing clear investment hotspots. For example, the Talanta Sports City Stadium in Nairobi, a major real estate-linked development, is expected to influence sports and entertainment infrastructure. The stadium, featuring a 60,000-seat FIFA-compliant arena, is expected to support real estate and commercial activity in surrounding areas,” it says.
Government-backed projects such as the Dongo Kundu Special Economic Zone (SEZ) along the coastal region also reflect the sector’s potential.
The Knight Frank report notes, “The Dongo Kundu SEZ at the Coast recorded progress with the signing of lease agreements, attracting investors in logistics, manufacturing, and trade.”
Affordable housing is also showing incremental progress.
Projects highlighted by the agency, including Makasembo in Kisumu by LAPFund, Mukuru kwa Njenga, and Railway City, are expected to encourage additional public-private partnerships aimed at expanding housing provision.
These developments are expected to influence outcomes during 2026.
Alternative real estate segments, including student housing facilities, are also gaining attention.
“Kenya’s higher education sector is changing, with universities investing in modern infrastructure. KCA University officially broke ground on its Sh7 billion masterplan, aligned with its 2024-2028 strategic plan. Meanwhile, the University of Nairobi is advancing a 4,000-bed Purpose-Built Student Accommodation project under a Design, Build, Finance, Operate, and Transfer PPP model,” the report notes.
Acorn Investment Management Limited (AIML), owner of the student housing brand Qwetu, reported a 32 per cent rise in half-year profits to Sh457 million, indicating growing interest in the segment.
As 2026 progresses, this performance reflects investor interest in student housing as part of Kenya’s alternative real estate market.
“While financing and bureaucratic delays remain challenges, Kenya’s alternative real estate market is showing resilience, offering diversified opportunities for investors in education, healthcare, affordable housing, and digital infrastructure,” the report concludes.
Agriculture and Agribusiness
Agriculture continues to underpin Kenya’s economy.
Between 2019 and 2024, the sector contributed 21.65 per cent to GDP, according to the Kenya National Bureau of Statistics (KNBS) 2025 report.
In the first quarter of 2025, agricultural growth stood at 6.0 per cent, compared to 5.6 per cent in the same period in 2024, supported by favourable weather and improved productivity.
Confidence among agribusiness operators remains relatively high.
According to a July 2025 survey, “82 per cent of respondents expected the sector to improve over the next three months, while 86 per cent were optimistic about performance over the next year, supported by consistent weather patterns and government productivity measures.”
Investment is also extending beyond farming into logistics, cold storage, and post-harvest value chains.
The Q3 2025 Stears Private Capital report notes that agribusiness featured prominently among sectors attracting investment.
Based on growth trends, investor interest, and policy support, agriculture and agribusiness are expected to remain key investment areas in 2026.
However, risks persist, including climate vulnerability, erratic rainfall, and limited irrigation infrastructure, which could affect productivity if not addressed.
Manufacturing, Industrial Parks and SEZs
Manufacturing, historically a modest contributor to GDP, is beginning to benefit from policy reforms and industrial infrastructure development.
According to Knight Frank’s 2025 Industrial Market Update, manufacturing growth in the first quarter of 2025 rose to 2.1 per cent from 1.9 per cent in 2024, while transport and storage expanded by 3.8 per cent.
Special Economic Zones continue to play a role.
The zones offer tax incentives, streamlined regulatory processes, and infrastructure support to attract foreign and domestic investors, according to the Special Economic Zones Authority (SEZA).
Developments such as Tatu City near Nairobi have attracted manufacturing firms and logistics companies, contributing to integrated value chain clusters.
Government strategies aimed at industrialisation and export-oriented manufacturing suggest the sector’s GDP contribution may rise.
“Improved infrastructure and regulatory frameworks make industrial real estate — including warehouses, logistics hubs, and EPZs or SEZs — a notable sub-sector for 2026,” Knight Frank observes.
Energy, Logistics and Green Investments
While less visible, energy and logistics are gaining prominence.
KNBS data shows that electricity and water supply sectors recorded combined growth of 3.6 per cent in the first quarter of 2025, compared to 2.8 per cent during the same period in 2024.
“Electricity demand continues to grow, with the country recording a peak demand of 2,316.2 MW on February 12, 2025, representing a 6.38 per cent increase from the previous financial year,” according to the Energy and Petroleum Statistics report for the year ending June 30, 2025.
Renewable and sustainable energy projects are increasingly influencing investment patterns.
“The petroleum sector has also undergone restructuring, with Kenya’s petroleum blocks reconfigured in line with exploration potential and international best practice. The reconstitution created 50 blocks considered to have potential, including offshore Lamu and the Anza Basin,” EPRA boss Daniel Kiptoo notes in the report.
Industrial zones and SEZs may further strengthen this investment environment by linking manufacturing, logistics, and energy infrastructure.
As policy conditions evolve, the energy-logistics-industrial linkage may attract increased capital in 2026.
Macro Tailwinds
The outlook for 2026 is supported by macroeconomic and policy developments.
Government reforms aimed at attracting foreign direct investment include the expansion of SEZs and privatisation initiatives.
Agriculture, education, and energy emerged as sectors attracting significant capital as investors increasingly focused on early-stage ventures.
According to the Stears Private Capital Africa Activity Report for the three months to September 2025, East Africa accounted for 28 per cent of African private capital activity, from 177 transactions valued at $5 billion (Sh644.2 billion).
The report notes that Kenya accounted for 65 per cent of East Africa’s transactions, compared to Uganda at 33 per cent and Tanzania at 27 per cent.
“In the consumer discretionary segment, education was the largest subsector, accounting for 32 per cent of deals,” the report states.
Risks and Considerations
Despite positive indicators, risks remain.
Manufacturing continues to face input cost pressures and energy reliability concerns, while agriculture remains weather-dependent, according to the Central Bank.
SEZ and industrial park investors must also navigate regulatory processes, land tenure considerations, and infrastructure reliability.
Knight Frank cautions that financing and bureaucratic delays remain challenges, even as resilience is evident.
As 2026 progresses, sectors including real estate, agriculture, manufacturing, energy, logistics, and green infrastructure continue to attract attention.
These trends are linked to reforms, improving macroeconomic conditions, and a shift toward value-driven investment.
Knight Frank notes that alternative real estate growth is supported by student housing, healthcare facilities, affordable housing projects, and PPPs.
While challenges persist, the market continues to offer diversified opportunities.
Taken together, these indicators suggest that 2026 may be a significant year in Kenya’s economic evolution.
Investors prioritising due diligence, long-term strategies, and structural fundamentals may find opportunities within the Kenyan market.
by JAMES GICHIGI
