CONSTRUCTION activity has maintained a healthy pace in 2026, with the Construction Industry Development Board (CIDB) reporting that main contractor awards reached RM85.4 bil by the end of May.
The figure keeps the industry on track to meet Kenanga’s full-year projection of RM180 bil in contract awards, although surpassing the RM238.9 bil achieved in 2025 is likely to be challenging.
The private sector remained the primary growth driver, contributing about three-quarters of the total contract value, while public sector projects accounted for the remaining 25%.
Although the implementation of several large-scale infrastructure developments has progressed more slowly than anticipated, Kenanga continues to maintain a positive outlook on the construction sector this year.
The research house believes project visibility is strengthening across both government-led infrastructure works and private developments.
A number of high-profile public infrastructure projects are expected to gather momentum in the coming months.
These include the remaining civil engineering and systems contracts for the Penang LRT Mutiara Line, alongside new work packages under Phase 2 of the Pan Borneo Highway and the Sabah-Sarawak Link Road.
The data centre segment also remains an important catalyst for the industry. Last year alone, six sizeable land deals involving major United States technology companies were completed, with Microsoft and Pearl Computing each acquiring two parcels to support the expansion of their data centre operations.
Notably, GAMUDA sold a 389-acre parcel at Springhill Industrial Park, Port Dickson to Pearl Computing for RM455.2 mil, alongside RM1 bil of enabling infrastructure works.
This positions GAMUDA favourably for follow-on work at the site, which can host 800MW-1,000MW of data centre capacity, translating into RM14 bil-RM20 bil in potential construction value.
In April, Pearl Computing kickstarted the rollout of the Springhill campus by awarding a RM1.72b core, shell, and MEP contract to GAMUDA.
Simultaneously, SUNCON was awarded a matching RM1.72 bil core, shell, and MEP contract to build a data centre at a new site in Bandar Serendah for a hyperscaler.
Separately, SUNCON secured an RM865.6 mil contract in April to build two substations for a data centre campus in Johor from a US-based hyperscaler.
This signals that the second wave of the data centre boom has officially materialized. The Springhill site is estimated to cater to 8-10 data centre projects, the Serendah site for 4-5 projects, and the new Johor site for 5-6 projects for the US-based hyperscaler, translating into a total pipeline of 17–21 data centre structures across these three hubs.
Kenanga expects a total of 3-4 data centre project rollouts in the second half of 2026. The research house maintains Overweight for the sector.
Despite slower-than-expected infrastructure projects roll-outs, Kenanga remains bullish on the sector, supported by persistent demand for data centres and sustained capital expenditure commitments from global technology firms.—July 8, 2026
Main image: hcamag.com
