The 45-year-old Muslim man, a Singaporean with Malaysian Permanent Residency status, was arrested on Sunday at Tanjung Sutera Resort in southern Johor state.
Police said the incident is being investigated under Section 295 of the Penal Code for injuring or defiling a place of worship with intent to insult the religion of any class.
The man was later remanded to police custody for four days.
Malaysia, a Muslim majority country, has large non-Muslim ethnic Chinese and Indian communities.
Johor Religious Council adviser Noh Gadut said, "There is a very strong possibility that the building, which was not built according to specifications, will be demolished."
He said the "surau", which a group of Buddhists from Singapore had used for chanting on Saturday, was not built with the approval of the Johor Religious Department.
"The Johor Religious Department cannot interfere with police investigations yet, but we will conclude our investigations within a month and hand over our report to the Johor Fatwa Committee," Noh told reporters after briefing the Sultan of Johor Ibrahim Sultan Iskandar.
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