Market Trends of malaysia construction chemicals Industry
Foreign direct investments into construction is likely to boost demand for commercial spaces in the country
- In 2022, Malaysia witnessed a 16% surge in commercial construction projects compared to the previous year, reflecting the nation's economic rebound from the COVID-19 pandemic. This recovery was evident in the country's GDP, which saw an 8.7% uptick in 2022 over 2021. With the anticipation of continued economic stability in 2023, the commercial construction sector is poised for a steady ascent. Forecasts indicate a 4.35% rise in new floor area, building on the momentum of 2022.
- The commercial construction sector faced a downturn in 2020 and 2021, with a sharp decline in new floor areas. In 2020, the reduction was a significant 54% compared to 2019, followed by a 32% drop in 2021 relative to 2020. Stricter regulations in 2021, including the nationwide implementation of the MCO (movement control order), further hampered the sector's output. Reports highlighted that the MCO alone led to construction delays of at least six months in Malaysia.
- Looking ahead, the commercial construction sector in Malaysia is poised for robust growth, with a projected CAGR of 4.67% during the forecast period (2023-2030). This positive trajectory can be attributed to the surge in foreign direct investments (FDI) witnessed in recent years. Notably, Malaysia saw a substantial influx of FDI across diverse sectors like construction, agriculture, manufacturing, and mining & quarrying in both 2021 and 2022. This trend is expected to fuel demand for commercial spaces, spanning offices, retail centers, hotels, and more, in the years to come.
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The rising urban population in Malaysia is the major driving factor for the residential sector's growth
- Malaysia's revenue surged to MYR 294.4 billion, accounting for 16.5% of its GDP in 2022, bolstered by eased COVID-19 restrictions and a robust economic upturn. In line with this, the residential sector witnessed a 9.28% uptick in volume output in 2022 compared to the previous year. Residential constructions were poised for further growth, with a projected nearly 4% increase in new floor area in 2023. This momentum was attributed to government measures outlined in the Budget 2022, including a notable USD 433.4 million guarantee via Skim Jaminan Kredit Perumahan and initiatives targeting housing for low-income groups.
- In 2019, the residential sector saw a 6.22% dip in new floor area compared to the preceding year, reflecting a broader construction downturn. For instance, the value of residential construction work in Malaysia declined by 2.7% in Q3 2019. The COVID-19 pandemic in 2020 exacerbated the situation, leading to a steeper 12.22% drop in volume output compared to 2019. This decline persisted through 2021, largely due to lockdown measures and labor shortages.
- Despite these setbacks, Malaysia's urbanization drive, bolstered by government initiatives and both domestic and foreign investments, is fueling the country's housing demands. In 2022, the urban population saw a 1.76% increase from the previous year, and this trend is expected to continue. Looking ahead, the residential sector is projected to witness a CAGR of 4.18% in new floor areas during the forecast period. This growth trajectory is underpinned by a concerted effort to boost the supply of affordable housing, aligning with the government's 12th Malaysia Plan.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- Growth in the Malaysian manufacturing sector to boost the demand for industrial and institutional buildings
- Growing infrastructure spending and announcement of new projects to impact Malaysia's infrastructure sector
