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Economic development

Malaysia's Construction Industry to Grow 9.6% Year-on-Year in 2025, Driven by Residential and Non-Residential Building Sectors

Strategic Insights

— 2 min read

Malaysia's construction industry is poised for significant growth in the coming years, driven by the building sector, with a projected 9.6% year-on-year increase in 2025. According to BMI, a Fitch Solutions company, the residential building sector is expected to expand by 15.7% year-on-year, while the non-residential building sector is forecast to grow by 10.3% year-on-year. The growth is attributed to ongoing private sector investment in luxury and large-scale projects, as well as sustained government initiatives targeting affordable housing.

The energy and utilities sub-sector is also expected to experience robust growth, with the government's commitment to the country's energy transition through policies such as large-scale solar tenders, combined with funding directed at renewables. This is part of Malaysia's drive to increase sustainability and accelerate green infrastructure development, under the 13th Malaysia Plan.

Key Takeaways:

  • The Malaysian construction industry is expected to grow 9.6% year-on-year in 2025, driven by the building sector.
  • Residential building construction is anticipated to expand by 15.7% year-on-year in 2025, supported by ongoing private sector investment in luxury and large-scale projects, alongside sustained government initiatives targeting affordable housing.
  • Non-residential building construction growth is forecast to grow 10.3% year-on-year in 2025, underpinned by substantial investment in data centre and semiconductor manufacturing projects.
  • Long-term infrastructure construction growth will be spurred by the energy and utilities investments, with regional integration driving the transport infrastructure development.
  • The energy and utilities sub-sector is forecast to grow 6.5% in 2025, compared to the wider infrastructure industry growth forecast of 4.2%.
  • Power plants and transmission grids continue to represent the largest share of industry value in Malaysia's energy and utilities construction sector, set to be the key growth driver over the coming decade.
  • Growth in the transport sector will be largely underpinned by commitments by the Malaysian government to prioritise improved connectivity in less developed regions, particularly in Sabah and Sarawak.
  • Malaysia's construction sector is expected to see an annual growth of 4.1% between 2025 and 2034, with long-term growth primarily fuelled by Malaysia's energy transition and industrial investment.
  • The country's strategic position within global supply chains, complemented by supportive government initiatives such as the New Industrial Master Plan 2030, will continue to attract manufacturing and logistics investments.

Statistics:

  • 9.6% year-on-year growth forecast for the Malaysian construction industry in 2025 (BMI, Fitch Solutions)
  • 15.7% year-on-year growth forecast for residential building construction in 2025 (BMI, Fitch Solutions)
  • 10.3% year-on-year growth forecast for non-residential building construction in 2025 (BMI, Fitch Solutions)
  • 6.5% growth forecast for the energy and utilities sub-sector in 2025 (BMI, Fitch Solutions)
  • 4.2% growth forecast for the wider infrastructure industry in 2025 (BMI, Fitch Solutions)
  • 4.1% annual growth forecast for the Malaysian construction sector between 2025 and 2034 (BMI, Fitch Solutions)

Sources:

  • BMI, a Fitch Solutions company
  • 13th Malaysia Plan
  • New Industrial Master Plan 2030
  • Malaysian government initiatives targeting affordable housing.

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