Kuala Lumpur is the fourth cheapest city to build in, according to the International
Construction Costs 2019 published by Arcadis, the leading global Design & Consultancy for natural and built assets.
Kuala Lumpur remains one of the least expensive cities for construction when
compared to 2018 where it ranked 47th. This movement is due to the inclusion of 50 additional cities this year, rather than major market changes and partly due to the declining local currency against US dollar since 2016.
The Arcadis International Construction Costs 2019 report details and ranks the relative cost of construction in 100 of the world’s major cities and the Asian cities ranking are below:
Kuala Lumpur has a growing economy and a range of civil engineering projects that will be key drivers for the construction industry in 2019. However, there is still political uncertainty around the future of certain major infrastructure projects as cost reviews continue. Despite this, the construction sector is still expected to grow by 4.3 percent this year.
Justin Teoh, Head of Malaysia for Arcadis, commented: “In 2019, we expect the construction sector to grow at a slower pace than in 2018 due to revisions around mega infrastructure projects and a general slowdown of global construction projects. However, the Malaysian government’s allocation of over USD362 million for affordable housing may stimulate industry growth. The increase of the minimum wage in January 2019 will also impact labour costs in Kuala Lumpur and so the industry should look to digital transformation to increase efficiencies and lower costs.”
The use of digital technology is in the early stages of adoption in Malaysia. The Construction Industry Development Board Malaysia (CIDB) has outlined Building Information Modelling (BIM) as an emerging technology that will tremendously increase the construction industry’s productivity.
Malaysia’s GDP grew by 4.8 percent in 2018, down from 5.9 percent the year before. The price of construction materials was stable in 2018, with the exception of steel, which decreased slightly. This year, Arcadis expects the construction sector to grow by 4.5 percent, as well as a slight increase of 0.5 percent in the tender price index.