Malaysia’s construction tender price inflation expected to grow by 3% in 2024, says Turner & Townsend

Malaysia’s construction tender price inflation expected to grow by 3% in 2024, says Turner & Townsend

KUALA LUMPUR (April 23): Malaysia’s construction tender price inflation is expected to grow by 3% in 2024, compared to the previous year, driven by various factors such as project type, industry procurement strategy and currency fluctuations, according to a report by global professional services company Turner & Townsend.

The report said there seems to be a positive shift as the pace of construction cost escalation seems to be moderating, while issues such as manufacturing backlogs, logistics, and supply chain disruptions are gradually stabilising.

Compared to 2023, persistent factors such as rising inflation, supply chain constraints, and elevated freight costs posed significant challenges as investors and the market adjusted to the external environment, with no indication of prices reducing to pre-pandemic levels.

“While crucial construction materials like aggregates, sand and concrete continue to experience upward price pressures, the frequency of incremental increases has reduced. The uptake in projects allow for some flexibility to accommodate price revisions.

“Rebar and cement, on the other hand, remain volatile in price, yet a discernible easing has been observed compared to previous fluctuations. This can be attributed to a decline in the prices of essential global commodities, such as iron ore and steel,” it said.

As the peak of construction cost escalation may have passed, the firm noted that costs will likely remain high, considerably impacting projects and programmes worldwide irrespective of demand conditions.

On key challenges, the firm said weakening ringgit, rising construction overheads, and shortage of skilled labour may impact the bench strength of delivery partners.

Apart from larger contractors with considerable financial strength, the majority of small- to medium-scale contractors and vendors are likely to be more selective with their order books, exercising greater caution and due diligence around commercial risks, it added.

Turner & Townsend is a global professional services company with over 10,000 people in 48 countries. Collaborating with clients across real estate, infrastructure and natural resources sectors, the firm specialises in major programmes, programme management, cost and commercial management, and net zero and digital solutions.

It is majority-owned by CBRE Group Inc, the world’s largest commercial real estate services and investment firm.