KUALA LUMPUR: The construction sector is set to ride a booming pipeline of data centre projects, which could generate RM58.7 billion to RM68.7 billion worth of construction opportunities across Johor, Kuala Lumpur and Port Dickson.
RHB Investment Bank Bhd (RHB IB) said Tenaga Nasional Bhd (TNB) has already signed five electricity supply agreements this year for seven data centre projects nationwide, with a combined power demand of 733 megawatts (MW) as of Aug 15.
Using a conservative benchmark of RM20 million construction cost per MW, this translates into about RM10.5 billion in job value.
Johor leads with 1,473MW of committed capacity, while Kuala Lumpur has 960MW planned. In Port Dickson, Pearl Computing Malaysia’s 157-hectare site earmarked for data centre development could accommodate between 500MW and one gigawatt (GW).
“The total planned capacity of between 2,933 MW and 3,433MW in these three areas could translate into a construction value of RM58.7 billion to RM68.7 billion,” it added.
RHB IB noted that contractors remain busy with jobs on hand, alongside upcoming projects. The value of work done hit RM43.9 billion in the second quarter, up 13 per cent year-on-year, a record high.
Following the recent earnings season, four of the nine construction companies under its coverage exceeded expectations, while five fell short.
The firm maintained its “Overweight” call on the sector, naming Gamuda Bhd, Sunway Construction Group Bhd and Binastra Corp Bhd as top picks.
Beyond data centres, contractors are eyeing several large-scale infrastructure projects, including the RM6–7 billion Johor Automated Rapid Transit (ART) system, with awards expected by year-end.
Other key projects include Penang Light Rail Transit (LRT) tenders worth RM3–4 billion in the second half of 2025, while tenders for segment two of the Penang LRT (Komtar–Penang Sentral), valued at RM5–6 billion, could be advertised in October.
In the longer term, the 13th Malaysia Plan (13MP) will allocate RM430 billion in development expenditure between 2026 and 2030, the largest in history, which is expected to further fuel demand for construction services.
RHB IB said the Bursa Malaysia Construction Index is currently trading at a forward price-to-earnings of 18.3 times, suggesting more upside as valuations remain reasonable compared to the last upcycle in 2017.
© New Straits Times Press (M) Bhd
