KUALA LUMPUR (Oct 8): Limited water supply headroom in Selangor could affect the timing of new data centre investments and temporarily moderate construction awards in 2027, according to BIMB Securities Research.

This constraint could affect the timing of new data centre investment in Selangor, "as water supply is assessed at the pre-investment stage, limited headroom over 2027–2029 may slow approvals of new water-intensive projects, potentially leading to a temporary moderation in new data centre construction awards in 2027", BIMB Securities said in a note on Thursday.

Given typical construction lead times of 18 to 24 months, the research house expects award activity to pick up again from 2028, as developers position for capacity coming on stream with Langat 2 Phase 2 in 2030.

"The impact could be mitigated by lower-water cooling designs, reclaimed water supply, or a shift of new projects to other states such as Johor," the research house noted.

While Air Selangor’s planned 2,360 million litres per day (MLD) water treatment plant (WTP) pipeline will expand treatment capacity by roughly 37% through 2031 to support organic growth and projected data centre water requirements of 632 MLD, near-term supply headroom remains tight.

Although the Rasau WTP Stage 1 (700 MLD) is due for completion in 2027 and will temporarily lift reserve margins, organic demand growth of around 3% annually will absorb most of the new capacity.

Under BIMB Securities assumptions, the system can sustain only about 60 MLD of incremental data centre demand across 2027-2029 while maintaining the National Water Services Commission’s (SPAN) required 15% reserve margin — representing just 10% of the state's projected 632 MLD requirement.

Looking ahead, major capacity additions such as Langat 2 Phase 2 (760 MLD, 2030) and Rasau Stage 2 (700 MLD, 2031) will be critical to lift data centre headroom to 523 MLD in 2030 and 931 MLD in 2031 respectively.

BIMB Securities noted that this sustained investment cycle across WTP construction and pipeline replacements will offer multi-year opportunities for infrastructure players.

Gamuda Bhd (KL:GAMUDA) has been named by BIMB Research as a key contender well positioned to capture future WTP and public-private partnership (PPP) contract awards, citing its track record in major projects like Rasau WTP Stage 1 and Sabah's Ulu Padas Water Supply Scheme.