FROM the tabulation of announcements from listed contractors on Bursa, domestic contract awards in quarter two 2026 (2Q26) came in at RM16.9 bil, bringing the first half of 2026’s sum to RM27.7 bil.
The buoyant job flow momentum in 2Q26 was boosted by DC-related and public sector contracts thanks to the strong acceleration in DC main package awards, alongside the conversion of various subcontracting opportunities within the DC space, as well as the award of big-ticket infra jobs.
These more than offset the weakness in commercial & residential flows, which fell 46% quarter-on-quarter to RM2.7 bil.
“As we highlighted previously, residential tender activity softened as developers and contractors adopted a wait-and-see approach due to renewed cost pressures and cautious homebuyer sentiment amid the Middle East conflict,” said HLIB.
Notable contract wins in 2Q26 include (i) construction of a hyperscale DC in Serendah by SunCon (RM1.75 bil), (ii) hyperscale DC package in Port Dickson to Gamuda (RM1.72 bil), (iii) EPCC works for Ulu Padas water supply scheme (effective value: RM3.75 bil) and (iv) hyperscale DC core and shell work in EBP to IJM (RM658 mil).
Notable overseas awards include (i) Kaohsiung MRT Xiaogang-Linyuan Line project (RM2.3 bil) and (ii) Smoky Creek and Guthrie’s Gap solar power station works (RM3.1 bil), both secured by Gamuda.
“We expect job flow momentum to remain robust in the second half of 2026, driven by the DC segment, with several pending hyperscaler DC packages poised for award in the coming months,” said HLIB.
This should also translate into a sustained pipeline of subcontract opportunities for MEP and power infra players through DC enabling works.
Following a softer spell in residential awards, HLIB anticipates a recovery as developers regain confidence to launch new projects amid a normalising cost environment and improving homebuyer sentiment.
“As for public infra, we believe the remaining Penang LRT packages, together with key water infrastructure projects such as Northern Perak Water, Sungai Rasau Phase 2 and Langat 2 Phase 2, could materialise in the coming quarters,” said HLIB.
As such, HLIB believes domestic contract awards could potentially match or exceed the RM49 bil mark recorded in 2025.
The research house reiterates their Overweight stance on the construction sector, underpinned by expectations of accelerating job flows in the second half of 2026, following a volatile first half of 2026.
More action in the second half of 2026 will be driven by impending award of several major DC tenders by US-MNCs, and greater clarity in timeline surrounding the rollout of large-scale infra projects under Budget 2027 ahead of a GE16.
There is also a potential pick-up in building project awards as developers resume residential launches post-quarter two 2026 slowdown.
Valuations have also turned more favourable following the sector wide de-rating due to the Iran war.—July 15, 2026
Main image: niayeshstone.com
