PETALING JAYA: The building of data centres is expected to support local construction activity over the near term, with select stocks in focus for such infrastructure projects.
CIMB Research, which has an unchanged “overweight” recommendation on construction stocks, has retained Gamuda Bhd
and IJM Corp Bhd as its top picks for data centre infrastructure plays, with Southern Score Builders Bhd emerging as a key internal mechanical and engineering (M&E) beneficiary.
“We expect around eight more major data centre contracts worth RM13bil to RM14bil and five pure M&E packages to be awarded by the end of the first half of next year,” the research house said, adding that Gamuda, IJM and Sunway Construction Group Bhd have led the early turnkey, and core and shell data centre projects.
The research house projects the Malaysian data centre market to surge to US$13.6bil by 2030 from US$4bil last year or a compound annual growth rate of 22.4%, driven by large 100MW to 200MW projects supporting artificial intelligence (AI) and cloud computing.
“With a 5GW local data centre pipeline and US$6mil per megawatt construction cost, we estimate up to US$30bil or about RM126bil worth of data centre projects for the local construction chain, as contract sizes for major data centres now range between RM1bil and RM2bil,” the research house said.
However, rising competition from European, Japanese, and local-foreign tie-ups could challenge the dominance of local builders.
“For alternative exposure, greater localisation of core and shell work is expected to benefit M&E contractors and power distributors, with internal M&E players offering stronger margin resilience,” it said, pointing to Southern Score as an early beneficiary.
It believes that, following the RM2bil allocation to the Malaysian Communications and Multimedia Commission under Budget 2026 to establish a sovereign AI ecosystem, digital infrastructure providers could capitalise on the rising demand for data centre-related services.
“Through Gamuda DNeX Cloud, Gamuda holds a first-mover advantage in offering specialised air-gapped cloud infrastructure in the country,” it added.
MBSB Research said the outlook for the construction sector remains positive, supported by a combination of easing cost pressures, resilient private-sector demand, ongoing public transport projects, resilient data centre demand, and strong investment under the 13th Malaysia Plan infrastructure roadmap.
It noted that the country’s construction sector saw slower growth in the third quarter of this year (3Q25) since 4Q23, with the value of work done growing 10.6% year-on-year (y-o-y) at RM45.4bil, which also saw 14 consecutive quarters of expansion.
The sector grew 12.9% y-o-y in 2Q25.
MBSB Research said the slower growth was underpinned by a broad-based slowdown across all sub-sectors, including residential buildings (up 11.6% y-o-y), non-residential buildings (up 10% y-o-y) and special trade activities (up 15.3% y-o-y).
Meanwhile, civil engineering projects accelerated by 8.9% y-o-y (2Q25: 7.5% y-o-y).
By percentage share, the civil engineering sub-sector remained the largest contributor, accounting for 36%, followed by the non-residential buildings at 28.5%, the residential buildings at 23%, and special trade activities at 12%.
By location, Sabah recorded the fastest growth at 74.4% y-o-y, followed by Kelantan at 25% y-o-y, and Negri Sembilan at 18.8% y-o-y.
In terms of value, Selangor led with RM10.4bil (22.3%) in construction work, followed by Johor at RM8.2bil (18%), Sarawak at RM4.9bil (11%), and Kuala Lumpur at RM4.7bil (10%).
Together, these states accounted for RM28.2bil, or 62% of the total.
