Middle East tensions may delay Malaysia property projects, raise construction costs, says Rehda

KUALA LUMPUR (March 13): Malaysia may see moderate property project delays and rising construction costs with protracted geopolitical tensions in the Middle East, developers cautioned.

A prolonged conflict will drive up energy prices, construction material costs and shipping expenses, which would eventually affect development timelines and project profitability, according to the Real Estate and Housing Developers’ Association (Rehda).

“Even though Malaysia is geographically far from the Middle East, the impact could still be felt here through higher energy costs and disruptions to supply chains,” Rehda president Datuk Ho Hon Sang told reporters during the release of the association’s latest industry survey.

Read also:
High debt, low income deter two-thirds of Malaysians from owning properties — Rehda

The remarks come at a time when oil prices are hovering near US$100 (RM393.40) per barrel as the US-Israel war against Iran enters the 14th day. Iran has vowed to keep the Strait of Hormuz closed, disrupting shipments of everything from oil to fertilisers crucial for the global economy.

Maintaining strong liquidity will also be critical for developers navigating uncertain conditions, said Datuk NK Tong, the managing director of Bukit Kiara Properties Sdn Bhd and immediate past president of Redha at the same event.

“During a crisis, profit is optional,” he said. “What matters now is how you conserve cash flow, manage the company efficiently and improve productivity.”

Rehda’s quick survey among members following the outbreak of the conflict indicates that around 30% of respondents expect a significant impact on the property and construction sectors if geopolitical tensions worsen, while around 43% anticipate a moderate impact.

Developers are particularly concerned about construction material prices, fuel costs and shipping logistics, which could all rise if global supply chains are disrupted. Key building materials such as steel, cement and reinforcement bars are among the inputs most likely to see price volatility should the conflict persist.

The preliminary survey on “Developer's Views on Potential Impact of Global Geopolitical Conflicts” was conducted from March 6 to 9, involving 55 members of the association.

Even before the war’s outbreak, developers were already facing cost pressures. Stricter enforcement on overloaded vehicles has already led to more than a 20% increase in concrete transportation costs, as contractors are required to make more trips to deliver the same volume of materials.

Its sentiment survey of 107 chief executive officers and senior executives also showed that 52% of developers plan to freeze hiring over the next 12 months, partly to manage costs and partly due to the growing adoption of artificial intelligence in data analysis and planning.

..........

EdgeProp's inaugural monthly print edition is fresh off the press! Free delivery is available for selected regions. Subscribe now.