Positive 4Q outlook for Malaysian construction

Positive 4Q outlook for Malaysian construction
Published: 12 October 2009

The outlook for the Malaysian construction sector looks positive in the fourth quarter, but the roll-out of major projects will likely only happen next year, analysts and industry players said.

Master Builders Association Malaysia (MBAM) president Ng Kee Leen said there was certainly greater optimism of a revival in the construction sector, thanks mainly to the Government’s stimulus packages and overall improvement in the global economy.

“We are definitely seeing more tenders and small public works jobs being dished out in recent months, but most of the bigger or mega projects are likely to be rolled out next year,” he told StarBiz recently.

The construction sector grew 1.1% in the first quarter but contracted 2.8% in the second.

“We expect the third and fourth quarter results to be positive,” he said, adding that the construction sector’s growth for the whole of 2009 could be 3%.

For 2010, Ng said “barring unforeseen circumstances, the construction sector’s gross domestic product should be better than this year’s 3% forecast, but definitely well below the highs seen in early 2000 when it was hovering around 6% to 7%.”

The construction sector remains attractive, especially since material costs such as sand, steel and cement prices have stablised, he said.

However, Ng advised construction players, especially developers in the sector, to not just build “more of the same” and expect the market to mop up whatever they build.

“Developers must be market driven to build projects that are wanted by the community,” he said, adding that there was now more interest in energy-saving buildings that embraced the green concept.

According to Ng, the construction sector’s yearly turnover was around RM60bil.

“About 50% of this turnover are from government projects and the balance from private initiated investments,” he said, adding that much of the government spending was for infrastructure development, including road works.

Ng noted that developers were also more confident of the property sector’s growth, with some unlisted ones like GSB Sentral Sdn Bhd, a member of the diversified Gapurna Group, having already started groundworks on its 348 Sentral development – a green property project with a gross development value RM1.1bil to be completed 2012.