Study: KL 4th cheapest city for construction

A worker is seen at a construction site near the Petronas Twin Towers in Kuala Lumpur December 15, 2016. ― Picture by Yusof Mat Isa
A worker is seen at a construction site near the Petronas Twin Towers in Kuala Lumpur December 15, 2016. ― Picture by Yusof Mat Isa

KUALA LUMPUR, May 8 — Global design and consultancy for natural and built assets Arcadis has listed Kuala Lumpur as the fourth cheapest city to build in its International Construction Costs 2019 report.

In a press statement today it stated that this was due to the inclusion of 50 additional cities this year instead of market changes as well as the Ringgit’s weak performance against the US dollar over the past few years.

“Kuala Lumpur remains one of the least expensive cities for construction when compared to 2018 where it ranked 47th (in Asia).

“This movement is due to the inclusion of 50 additional cities this year, rather than major market changes and partly due to the declining local currency against US dollar since 2016,” the statement read.

Kuala Lumpur ranked 97 out of 100 countries in the world and is the 15th out of 18 countries in Asia, while Hong Kong came in first in Asia and third in the world. The higher the number, the cheaper it is to build in the city.

The statement also said that Malaysia’s capital’s growing economy and range of civil engineering projects will be the key drivers for this year’s construction industry.

At the same time, political uncertainty around the future of certain major infrastructure projects still raises concern within the construction industry as cost reviews continue. However, the sector is still expected to grow by 4.3 per cent this year.

Arcadis Malaysia head Justin Teoh observed that the growth would be on the back of Putrajaya’s efforts to increase affordable housing.

“In 2019, we expect the construction sector to grow at a slower pace than in 2018 due to revisions around mega infrastructure projects and a general slowdown of global construction projects.

“However, the Malaysian government’s allocation of over US$362 million for affordable housing may stimulate industry growth.

“The increase of the minimum wage in January 2019 will also impact labour costs in Kuala Lumpur and so the industry should look to digital transformation to increase efficiencies and lower costs,” he said in the statement.

As the use of digital technology is still in its infancy in Malaysia, the report also noted that the Construction Industry Development Board Malaysia (CIDB) outlining Building Information Modelling (BIM) as an emerging technology will tremendously increase the construction industry’s productivity.

This year, Arcadis expects the construction sector to grow by 4.5 per cent and a 0.5 per cent slight increase in the tender price index.

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