The cost of doing business increased for 81% of property developers in the first half of 2026, up from 74% in the second half of 2025, according to the Real Estate and Housing Developers’ Association (REHDA) Malaysia.
Its latest property industry survey, which covered 181 respondents, found that 35% of developers reporting higher costs saw increases of between 3% and 6%.
REHDA president Datuk Zaini Yusoff said construction costs had risen by an average of about 13%, with earthworks and infrastructure works seeing increases of 20% to 30% while some normal building works recorded rises of only 3% to 5%.
He said higher diesel-related costs, including bitumen, following the West Asia conflict had particularly affected road, earthworks and infrastructure projects.
The survey also found that 63% of developers faced construction challenges in 1H26, with high material prices, supply shortages and inconsistent supply among the main issues. Labour challenges included high wages, labour shortages and a lack of skilled workers.
Zaini said ongoing projects should generally remain within their existing budgets, while new projects could be priced slightly higher to account for rising costs.
Despite the conflict, he does not expect another major jump in material prices as costs have already begun to stabilise.
“Prices went up significantly due to the West Asia crisis. Now, you can see that prices have already stabilised,” he said.
Zaini expects homebuyers to remain cautious in the first half of 2027 depending on developments in the West Asia conflict, but said developers would continue offering homes across affordable, middle-income and higher-end segments.
“Despite the West Asia conflict, people still need houses. So, we have to provide a range of homes between the affordable, middle-class and higher-end segments because each segment has its respective buyers,” he said.
