Posted on 07 Oct 2025
Hong Leong Investment Bank Research anticipates sustained growth in Malaysian construction contracts for the last quarter of the year, driven primarily by the rollout of data centres and major infrastructure projects, Kallanish notes.
"In our view, contractors broadly can still add to orderbook from the data centre segment as well as infra projects," the research house notes.
This positive outlook follows a robust year-to-date performance. Domestic contract awards in the third quarter totalled MYR 10.7 billion ($2.54 billion), a decrease of 16% quarter-on-quarter and 5% year-on-year.
Despite the Q3 dip, the y-t-d sum has reached MYR 39.7 billion, marking a 24% increase and registering the strongest nine-month figure since 2016.
The key drivers behind this sustained trend were data centres and public sector-related jobs, including roads, railways, water, and various private finance initiative (PFI) projects.
Hong Leong expects the contract momentum to continue into the fourth quarter, particularly as most data centre contracts have yet to be awarded.
"The robust nine-month figure reinforces growth path for contracts in 2025, extending orderbook expansion trajectory. In our view, staggered data centre awards could see some spill-over into 2026 but growth in 2025 is locked in," says the research house.
The trend of splitting mechanical, electrical, and plumbing (MEP) packages from shell contracts will also see the current data centre award cycle stretch into 2026.
This aside, fourth quarter could see more contracts trickling out from Penang Light Rail Transit (LRT) subcontracts and systems package tenders.
Hong Leong continues to anticipate more road contracts from East Malaysia in the coming months in addition to multiple renewable energy engineering, procurement, construction, and commissioning contracts while the East Coast Rail Link (ECRL) Section D package hopefully materialises by year end.
As for the commercial segment which includes residential projects sitting on commercial plots, it anticipates contributions in-line with typical run rate inQ4. While there have been sizable water project tenders called and submitted in the past few months these should materialise in 2026, it adds.
Source:Kallanish
