Johor earthquakes shake sentiment rather than buildings safety, says BIMB Securities

• “The combination of EC8, inherently stable low-rise design and resilient utilities keeps seismic risk contained.”

KUALA LUMPUR (Sept 2): A slew of recent mild earthquakes in Johor is rattling investors’ sentiment rather than threatening physical structures, BIMB Securities said on Tuesday.

Most data centres in Malaysia are single-storey, under 10 metres tall, with minimal reliance on load-bearing columns, giving them inherent seismic stability, the research house said in a note. Further, data centres are built with ‘Eurocode 8’ (EC8) seismic-resistant structural design, it noted.

“The real risk is investor psychology, not structural collapse,” the research house said. “The combination of EC8, inherently stable low-rise design and resilient utilities keeps seismic risk contained.”

Long believed to be free from major disasters such as earthquakes, Malaysia has attracted a wave of foreign investors seeking to build data centres, with Johor emerging as the prime beneficiary of the inflow.

Johor was struck by a series of minor earthquakes beginning on Aug 24 in Segamat. No casualties were reported, though cracks appeared in several government buildings, according to news reports. The state was hit by another mild tremor near Batu Pahat over the weekend.

The 2015 Sabah earthquake, which killed 18 on Mount Kinabalu, ultimately prompted Malaysia to adopt EC8 seismic standards for high-rise and critical infrastructure the following year.

“The recent Segamat tremors may have unsettled the public, but they pose no material danger to well-designed buildings,” BIMB Securities said. “Malaysia’s seismic risk is best characterised as episodic disruption and perception shocks rather than catastrophic collapse.”

The research house stressed that seismic risks are contained for Malaysia’s data centre and construction sectors, and told investors to buy Gamuda Bhd (KL:GAMUDA) and Sunway Construction Group Bhd (KL:SUNCON) on “any fear-driven weakness” for exposure to data centre-driven demand.

As Penang girds itself towards the last lap of its Penang2030 vision, check out how the residential segment is keeping pace in EdgeProp’s special report: PENANG Investing Towards 2030.