Malaysia’s construction industry is on an upward trajectory, with a predicted 3% growth in tender prices for 2024. Key factors influencing this trend include project type variability, procurement strategies, and currency fluctuations.
A recent report by Turner & Townsend indicates a positive shift in construction costs, as the rapid escalation observed in previous years appears to be stabilising. Despite challenges like inflation and supply chain disruptions, the construction industry is finding its footing with a moderate increase in costs and a gradual return to stability in logistics and supply chain factors.
Crucial construction materials, however, such as aggregates, sand, and concrete, are still subject to upward price pressures. Although the rate of increase has slowed, allowing for some adaptability in project pricing, rebar and cement prices remain volatile, even if less so than before, reflecting a decrease in global commodity prices like iron ore and steel.
Turner & Townsend’s analysis suggests that while the peak of cost escalation might be behind us, the overall expenses remain high, impacting projects across the board. The Malaysian construction sector faces challenges like a weakening ringgit, increasing overhead costs, and a labour skill shortage which could affect the capacity of project delivery partners.
Despite these challenges, Malaysia’s construction market is anticipated to reach US$38.55 billion in 2024, with a forecasted compound annual growth rate (CAGR) of 8.55%, and aims for US$58.10 billion by 2029.
Significant infrastructure projects, including the 5G rollout, East Coast Highway 3, and Mass Rapid Transit 3 (MRT3), are expected to drive this growth. Private sector projects, accounting for a substantial portion of output, have grown considerably, indicating a robust market driven by private investment. In contrast, government project developments have seen little to no growth year-on-year.
With the government’s support, as evidenced by the largest-ever budget for 2024 and the push for public-private partnerships, the construction industry is poised for sustained growth in the coming years.
