81pct of developers report higher business costs in 1H 2026

KUALA LUMPUR: A recent market survey conducted by the Real Estate and Housing Developers Association of Malaysia (Rehda) revealed that 81% of developers reported increased business expenses in the first half of 2026 (1H 2026), compared to 74% in the same period last year (2H 2025). The survey encompassed 181 developers and found that among those experiencing higher costs, 35% indicated an increase ranging between 3% to 6%.

Rehda's president, Datuk Zaini Yusoff, attributed this rise to a 13% average increase in construction costs, although the impact varied by project type. Earthworks and infrastructure projects saw the most significant hike, between 20% to 30%, while standard building works experienced a smaller increase, of about 3% to 5%. The surge in costs can be linked to higher prices for diesel-related products, including bitumen, due to the ongoing conflict in the Middle East.

The top three building material-related challenges faced by developers included high material prices, supply shortages, and inconsistent supply. For labour, the primary issues were high wages, a shortage of labor supply, and a lack of skilled workers. Zaini Yusoff stated that ongoing projects generally remain within their budget, while new contracts could be priced slightly higher to account for the increased costs, typically with a contingency of 3% to 5%.

Despite the ongoing conflict in the Middle East, Zaini does not anticipate a significant further rise in construction material prices, as prices have officially stabilized after the initial increase. He also noted that even amidst the conflict, buyers will likely remain cautious in the first half of 2027, depending on developments in the Middle East, but developers will continue to provide homes across all market segments.