PETALING JAYA: The construction sector is expected to maintain its growth momentum into 2027, supported by a sizeable infrastructure pipeline and continued private-sector investment in data centres.
Activity should increasingly hinge on project execution, contract awards and order book replenishment, while input costs and potential wage increases remain key considerations for contractors.
Apex Securities Research maintains an “overweight” stance on the sector, underpinned by the potential rollout of major infrastructure projects, stabilising input costs, an improving property sector and the ongoing data-centre investment upcycle.
“Taken together, these developments reinforce our view that 2027 will be a year of execution rather than new announcements for the construction sector, with near-term share price catalysts sitting largely outside the budget speech itself,” the research house said.
The Budget 2027, the fifth Madani budget and second under the 13th Malaysia Plan (2026 to 2030), is scheduled for tabling on Oct 9 under the theme “Malaysia Madani: Reaching for the Skies, While Anchored on Our Values”.
For the construction, its base case is continuity rather than fresh stimulus, with the sector’s order book already supported by multi-year rail, highway, water as well as Sabah and Sarawak connectivity projects carried over from Budget 2026, Apex Research noted.
The key swing factors in 2027 are expected to be execution milestones, including contract awards, tender outcomes and funding progress, rather than new mega-project announcements.
It highlighted that the Penang Light Rail Transit (LRT) is among the key near-term catalysts, with the RM4bil to RM5bil civil main contract 2 package expected to be awarded in November 2026.
Meanwhile, the Johor Baru elevated autonomous rapid transit project, valued at about RM7bil to RM8bil following scope optimisation, is targeted for finalisation by end-2026.
Furthermore, Apex Research noted that Mass Rapid Transit 3 (MRT3), or the Circle Line, is also expected to move towards construction in 2027, with main contract awards potentially extending from late 2026 to mid-2027. The project is expected to cost below RM45bil.
Beyond public infrastructure, data centres remain a structurally durable growth driver.
As of the first quarter of financial year 2026, 23 projects totalling 3.8 gigawatts were under construction, representing an estimated RM76bil to RM95bil in construction value. Johor accounts for around 68% of Tenaga Nasional Bhd
’s data-centre capacity.
Apex Research noted that construction work done rose 8.7% year-on-year to RM94.3bil in the first half of financial year 2026, supporting the sector’s order-book replenishment prospects.
“The government’s RM81bil development expenditure allocation for 2026, including RM17.5bil for transport, provides further support for infrastructure spending,” it said.
“Together with the Penang LRT, MRT3 and data-centre pipeline, the ongoing project flow should underpin order book replenishment and earnings visibility into 2027,” it added.
Apex Research’s top picks are ISF Group Bhd, Kerjaya Prospek Group Bhd and HSS Engineers Bhd.
Meanwhile, one broker told StarBiz that he remains optimistic on the outlook for the construction sector, which he said should continue to see steady work next year, supported by infrastructure projects and strong demand for data centres.
“Contract wins will be key for contractors, even though higher labour costs could put some pressure on margins.”
