KUALA LUMPUR, April 8 (Xinhua) -- Malaysia's construction sector continues to benefit from strong demand for data centers, with contractors securing hyperscale mandates amid Southeast Asia's digital infrastructure expansion, analysts said.
Robust leasing demand, cost competitiveness, and long-term client partnerships are driving the growth, MBSB Research said in a note on Wednesday.
The research house said Malaysia's data center construction pipeline remains healthy, with about eight major contracts worth 13 billion to 14 billion ringgit (3.26 billion to 3.51 billion U.S. dollars) expected by mid-2026, alongside five additional mechanical and electrical packages.
The momentum is further supported by the government's 2 billion ringgit allocation to the Malaysian Communications and Multimedia Commission under Budget 2026 to develop a sovereign AI ecosystem.
MBSB's channel checks indicate contractors remain actively tendering for new data center projects.
Citing Cushman & Wakefield data, RHB Investment Bank noted that Malaysia has 3,252 MW of data center capacity planned through 2030, which could translate into 22.4 billion U.S. dollars in construction value.
The Johor-Singapore Special Economic Zone has made Johor the top-ranked location in the APAC DC Maturity Index, the research house said in a note on Tuesday.
It also said geopolitical tensions in the Middle East may encourage some hyperscalers to shift operations to Asia, including Malaysia.
Kenanga Research also said Malaysia's construction sector's fundamentals remain strong despite near-term geopolitical risks and a slower rollout of infrastructure projects.
Persistent demand from global technology firms and ongoing public sector projects are expected to keep Malaysia's construction sector robust through 2026, said the research house. (1 ringgit equals 0.25 U.S. dollars) ■
