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Malaysian Institute of Architects says construction industry to grow 10.5% in 2015

Growth in Malaysia's construction industry shows no signs of slowing. The building sector expanded by 8.7 per cent in 2014, while the first quarter of 2015 saw the value of construction contracts awarded rise by a hugely impressive 250 per cent year on year.

According to Pertubuhan Akitek Malaysia (the Malaysian Institute of Architects), the remainder of 2015 is likely to be equally strong for the nation's building sector. The uncertainties currently affecting the country's wider economy are not expected to hamper the impressive rate of construction growth: Mohd Zulhemlee An, president of the professional institute, expects the industry to expand by 10.5 per cent this year.

"The construction industry has proven to be one of the more resilient industries in Malaysia, which has managed to survive several economic downturns over the past two decades," he was quoted by The Edge Property as saying.

Drivers of growth in the Malaysian building market

One of the primary reasons for the ongoing strength of Malaysia's building industry has been the performance of key sub-sectors. 

A prime example is non-residential building activity, which held a 34.8 per cent share of all construction spending during the first quarter of this year. In comparison, civil engineering contributed 30.5 per cent, residential building 29.9 per cent, and special trades 4.8 per cent.

Of Malaysia's 13 states, the biggest individual driver of construction growth has typically been Selangor. Between January and March, the country's official statistics department estimates that a quarter of the total value of Malaysian construction work was carried out in the state. Unsurprisingly, the federal territory of Kuala Lumpur also attracted a significant volume of construction spending, bringing in 17.9 per cent of the national total during the first quarter.

Major Malaysian construction projects

Several key building projects are also having a major impact on the future outlook for the Malaysian construction market.

A prime example is the 1Malaysia Housing Programme, or PR1MA. Established in 2011, this government-supported project aims to deliver tens of thousands of high-quality affordable homes across the country. As well as building the properties, the government has pledged to ensure they are affordable by offering mortgages of up to 110 per cent of each home.

Another major development in the pipeline is Tebrau Bay Waterfront City, a 52-hectare mixed-use scheme in the state of Johor. The brainchild of Shanghai-based Greenland Group, the $666 billion Waterfront City will be jointly developed by Malaysian company Iskandar Waterfront City Berhad. Plans for the site - which is set to be finished over a 15-year period - include a theme park, a school and an opera house.

One of Kuala Lumpur's most ambitious projects, meanwhile, is the $1.4 billion KL118 tower. When it opens in 2020 it will surpass the Petronas Twin Towers as the tallest building in Malaysia, with a total of 400,000 sqm of residential, office and hotel space.

What opportunities does Malaysia offer for building material suppliers?

Understandably, Malaysia has to look overseas to meet demand for certain building materials. 

Figures from the Observatory of Economic Complexity show that Malaysia imported $185 million of cement in 2012, the bulk of which came from other Asian nations. Other key construction material imports include building stone ($53.6 million worth of imports in 2012), and roofing tiles (just under $6 million).

With construction growth expected to continue for the foreseeable future, Malaysia represents a significant opportunity for foreign building materials suppliers.

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