PETALING JAYA: Malaysia’s red-hot data centre space could unlock about RM40bil worth of contracts going forward, estimates Maybank Investment Bank Research (Maybank IB).
The projection is premised on the fact that Tenaga Nasional Bhd
has signed 10 electricity supply agreements for 2,000MW of data centre capacity.
Assuming RM20mil per MW to construct, Maybank IB foresees about RM40bil of potential data centre-related job wins.
“We have been made to understand that a couple of very large multi-national corporations are actively landbanking in Malaysia.
“Thus, we also remain upbeat on the data centre-mechanical and electrical sector in the second half of financial year 2026 (2H26).
“We expect an acceleration in mechanical, electrical and plumbing (MEP) work package awards driven by the rollout of subcontracting packages tied to the RM10.3bil of main contractor data centre packages awarded in 2025.
“Based on typical project sequencing, MEP packages are usually awarded six to 12 months post site mobilisation, following completion of early-stage earthworks and substructure works,” stated Maybank IB.
Data centre projects, along with infrastructure rollouts, are expected to keep contractors’ order books busy, helping the domestic construction sector step into a stronger second half of the year.
The first six months of 2026 stayed resilient, even as higher diesel prices likely weakened profit margins in the second quarter on a sequential basis.
“We understand that the currently easing diesel prices are causing the reverse to occur which should translate into margin recovery going forward,” said Maybank IB.
Over the next six months, the research house expects the award of many more mega projects.
These include Penang-Perak water transfer (RM5bil), Penang Mutiara LRT line systems works (RM3bil), Penang Mutiara LRT line cross sea rail link (RM4bil) and Langat 2 Phase 2 water treatment plant (RM4bil).
In a separate note, MBSB Research said the Mass Rapid Transit 3 (MRT3) project is expected to remain relatively muted in 2H26 as land acquisition progresses, with major tender activities likely commencing in 2027.
With an estimated RM31bil in civil works across three main packages, MRT3 remains the sector’s largest medium-term infrastructure catalyst, it said.
“Our economics team has maintained their forecasted 9% growth for the construction sector in 2026.
“Despite continuous fiscal consolidation as seen in the reduction of development expenditure under Budget 2026, amounting to RM81bil (minus 5.8%), it remains meaningful, with a focus on crucial projects,” stated MBSB Research.
Channel checks by the research house revealed that prices of building materials, particularly cement, are inching up, mainly due to a surge in diesel costs.
Bulk cement prices have remained stagnant over the past six months at RM410 per tonne, following the 6.5% month-on-month increase in December 2025.
“We gather that this is largely due to the stringent enforcement by the Transport Ministry through the Road Transport Department against overloaded commercial vehicles, causing a tighter demand for delivery trucks, while geopolitical tensions in the Middle East further exacerbated supply chain pressures.”
Meanwhile, average prices of steel bars have been on the uptrend, rising 13.3% year-on-year to about RM2,360 per tonne in May 2026.
“Despite the ongoing cost hike, we believe large-cap contractors are well-positioned to manage construction cost inflation through favourable contract structures.
“Besides cost-plus arrangements, rise-and-fall clauses allow higher material costs to be passed through to clients, while the fixed-price subcontract model and prudent project contingencies help preserve margins,” added MBSB Research.
It maintained its “positive” stance on the construction sector, backed by a resilient private sector demand and accelerating public project execution.
