KL ranks as 4th-cheapest city for construction activities

By LYDIA NATHAN / Pic By MUHD AMIN NAHARUL

Kuala Lumpur (KL) has emerged as the fourth-cheapest city for construction activities among 100 cities globally, according to the International Construction Costs 2019 published by Arcadis.

The survey conducted by the global design and consultancy for natural and built assets noted that KL has remained one of the least expensive cities to build in when compared to 2018, where it ranked 47th.

The move was due to the inclusion of 50 additional cities this year, rather than major market changes, and partly due to the declining local currency against the US dollar since 2016.

“KL came out 15th among the Asian cities and 97th in world rankings. Hong Kong came out top for both,” Arcadis noted.

The survey covers 20 building types across 100 cities and costs are a representative of the local specifications used to meet market needs.

According to the survey, KL has a growing economy and a range of civil engineering projects that will be the key drivers for the construction industry in 2019.

“However, there is still political uncertainty around the future of certain major infrastructure projects as cost reviews continue,” Arcadis noted, adding that the construction sector is expected to grow 4.3% this year despite that.

Arcadis head of Malaysia Justin Teoh said the construction sector in 2019 is expected to see a slower growth pace compared to 2018 because of the revisions of mega infrastructure projects and a general slowdown of global construction projects.

“However, the Malaysian government’s allocation of over RM1.5 billion (US$362 million) for affordable housing may stimulate industry growth. The increase in the minimum wage in January 2019 will also impact labour costs in KL, and so, the industry should look to digital transformation to increase efficiencies and lower costs,” he said.

Teoh said Arcadis expects the construction sector to grow by 4.5%, as well as a slight increase of 0.5% in the Tender Price Index.

In the meantime, he said while the use of digital technology is still at its infancy stage in the country, the 
Construction Industry Development Board Malaysia has outlined Building Information Modelling as an emerging technology that will tremendously increase the construction industry’s productivity.

Malaysia’s GDP grew by 4.8% in 2018, compared to 5.9% the year before.

Teoh said the price of construction materials was stable in 2018, with the exception of steel, which decreased slightly.