KUALA LUMPUR: Malaysia is an attractive place for construction projects compared to some other countries in the region as the cost to build is cheaper, says Turner & Townsend, an international consulting firm.
Presenting its findings at the plenary presentation at the Future Cities Summit 2024 at the Malaysia International Trade and Exhibition Centre here yesterday were the firm’s country director Leo Leow, and occupier and retail sector director for Asia Joshua Netto.
“Take Kuala Lumpur for instance. The cost to build (not including land, permits and licensing) is US$1,237 (RM5,288) per square metre compared to Hong Kong’s US$45,000.
“In addition, the forecast tender price inflation for Malaysia is at 3%, one of the lowest in the region,” said Netto.
Comparing Malaysia’s performance to neighbouring countries in terms of cost to build, Malaysia is positioned at 73 out of 91 markets globally.
“Regionally, we rank higher than emerging markets like the Philippines, Indonesia, Vietnam and India, but remain below more developed countries such as Singapore, Hong Kong, (South) Korea and Japan,” said Netto, adding that other factors that give a boost to the construction sector include the 2024 Budget.
“RM90bil has been allocated for development expenditure, which is 23% of the total budget, with 55% of this development expenditure designated for key infrastructure projects like the Penang LRT, Pan Borneo Highway and the Sarawak-Sabah Link Road.
“While these projects are expected to boost the constructionsector, it also signals broader economic stability and commitment to growth.
“This favourable long term outlook will in turn enhance investor confidence,” said Netto.
Looking at the performance of the construction sector, Leow said the sector’s contribution to national GDP in 2023 grew by 6% compared to 2022, showing strong recovery.
The momentum has continued as of the second quarter of 2024, with year-on-year GDP growth recorded at 17%.
“Despite challenges like high inflation and labour costs, construction output is on the rise since 2021 after the lockdown, trending towards the pre-pandemic level.
“Overall, order books are set to grow in value this year due to the return of major infrastructure projects and the investments in data centres and advanced manufacturing projects which are driven by continued advancement in technology.
“In addition, the number of registered G7 contractors and approved private projects have also increased. All these signs show the sector is recovering well and is set for continued progress in 2025,” said Leow, adding that market sentiment is reflecting real conditions on the ground, as seen in Bursa Malaysia’s Construction Index.
“As of September, the Construction Index has increased by 49% compared to 2023.” Another speaker at the plenary session was Pablo Gilabert, innovation director of CYPE, a Spanish firm that develops and distributes software for architecture, engineering and construction professionals.
Gilabert stressed that innovation and integration of new technologies were key to transforming the construction sector. “Traditional methods, often time-consuming and inefficient, hinder the industry’s ability to meet the growing demands of modern projects.
“By incorporating cutting-edge solutions like building information modelling (BIM), companies can streamline not only the design and construction phases but also improve project coordination, permitting processes, and compliance tracking, which reduces costly delays and errors that arise from outdated practices.
“Software tools that help the architecture, engineering and construction sector shift from manual, inefficient workflows to more agile, digitally-driven processes will empower professionals to reinvent themselves, optimising workflow to reach new levels of productivity, precision, and compliance,” added Gilabert.
