International construction market survey 2016

Around the globe
Malaysia – Kuala Lumpur
Low oil prices mean focus is on infrastructure to rebalance economy
Economic overview
Falling oil prices have slowed the Malaysian economy.
With public revenues highly dependent on the earnings
of the state-owned Petronas, each USD1 drop slashes
RM300 million from annual public revenue. However,
more positively, consumer expenditure has been growing
well, beating expectations at five percent year-on-year.
Construction market and trends
Public infrastructure spending is being prioritised to
stimulate the economy, while the national property
cycle has peaked and is set to fall over 2016 and 2017.
Industries dependent on oil revenues, including
engineering and project management, have fallen in
line with oil prices, reducing the demand for office
accommodation, warehousing and industrial projects.
Future outlook
With currency devaluation raising import costs and a
planned minimum wage increase, inflation is likely to rise
beyond the central bank’s target of 2.5 percent. Growth
in Malaysia’s construction sector will be slower due to
weaker private sector investment and likely budget
reductions due to lower oil prices. With such a significant
fall in public revenues, further cost-cutting measures are
likely to be introduced.
However, the government remains committed to several
large public programmes including the LRT Line 3, Tun
Razak Exchange and the Sungai Buloh Kwasa Land project
– a major new township development in the region of
Selangor with direct links to the airport and Kuala Lumpur.
House prices and residential construction are likely to
taper off in 2016 as moderate oversupply occurs.
International building costs per m 2 of internal area, in 2016
MYR
USD
(exchange
rate: 4.34)
Airports (building only)
Domestic terminal, full service 6,623 1,530
Low-cost carrier terminal, basic service 4,635 1,070
Car parks
Multi-storey above ground 1,133 260
Multi-storey below ground 1,751 400
Commercial
Offices – Business Park 3,296 760
CBD Offices – up to 20 floors medium (A-Grade) 4,305 990
CBD Offices – high-rise prestige 6,026 1,390
Education
Primary and secondary 1,988 460
University 4,882 1,120
Hospitals
Day centre (including basic surgeries) 2,977 690
Regional hospital 3,966 910
General hospital (e.g. city teaching hospital) 4,470 1,030
Hotels
3 Star travellers 5,191 1,200
5 Star luxury 6,335 1,460
Resort style 9,898 2,280
Industrial
Warehouse/factory units – basic 2,009 460
Large warehouse distribution centre 2,575 590
High-tech factory/laboratory 4,305 990
Residential
Individual detached or terrace style house – medium standard 2,482 570
Individual detached house – prestige 3,172 730
Townhouses – medium standard 1,658 380
Apartments low-rise – medium standard 1,936 450
Apartments high-rise 2,760 640
Aged care/affordable units 2,070 480
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Turner & Townsend