Summary

The Vietnam construction market was valued at USD 57.52 billion in 2020 and the market is projected to reach USD 94.93 billion by 2026 registering a growth rate of more than 8.71% during the forecast period (2021 -2026).

The Vietnam construction industry is one of the best performing in Asia-Pacific (APAC) region. Despite losing the momentum due to COVID-19, it has continued to grow strongly in 2020. According to the General Statistics Office (GSO) of Vietnam, construction value-add recorded a growth of 5.7% (year-on-year) in Q3 2020. As a result, the cumulative growth rate for the three quarters was at 5%. In Feb 2021, According to the Vietnam Construction Ministry, the domestic real estate market overcame the most difficult period of the COVID-19 pandemic as a result of positive developments in the market and the overall economy in the fourth quarter of 2020.

The construction sectors account for significant economic growth in Vietnam. The Vietnamese construction industry (VCI) has been growing at an average of 8% over the past 10 years.

It is projected to continue the same growth rate due to the government's efforts to improve the quality of the country's overall infrastructure with investments in infrastructure construction, tourism infrastructure, and housing projects across the country.

The rising domestic consumption and the EU-Vietnam Free Trade Agreement (EVFTA) are driving the retail industry and foreign retailers, especially those from the EU who were expected to enter the country, increasing demand for office space.

In the residential construction market, high-end condos in the city remained in demand despite the pandemic, and there were no signs of a fall in prices.

In housing projects, the Hanoi People's Committee issued a decision approving the outline for devising the capital's housing development program for 2021-2030, with a vision toward 2040.

The increasing demand for warehousing drives investment in Vietnam's logistics system with foreign enterprises' appearance and further business expansion. E-commence and food delivery have now become very crucial in everyday life.

This new trend (E-commence and food delivery) is growing in the neighboring cities of Ho Chi Minh City, such as Binh Duong, Dong Nai, and Long Anthe. The e-commence platform wants to extend its footprint by setting up distribution centers and fulfillment centers, inviting investments from interested domestic and international firms.

Key Market Trends

Government plans to develop Infrastructure driving the Construction Market

In Vietnam, the focus of its infrastructure reforms will mostly revolve around the transport and logistics sectors. According to industry experts, there is a growing demand during the forecasted period for more efficient transport networks that could reduce logistics costs.

Vietnam’s Ministry of Transport is working on plans on eight sections of the North-South Expressway project. The eight sections are from Phan Thiet to Dau Giay; Vinh Hao to Phan Thiet; Cam Lam to Vinh Hao; Nha Trang to Cam Lam; Dien Chau to Bai Vot; Nghi Son to Dien Chau; National Highway 45 to Nghi Son; Mai Son to National Highway 45. The work will be completed by 2022. These eight stretches of the North-South Expressway would cost about USD 4.27 billion to build.

Under Vietnam's Railway Development Strategy 2020, the government planned to increase the share of passenger and freight transport through railways from 0.5% of the total passenger transport market share and 1.0% of the total freight transport in 2015 to 13.0% in terms of passenger transport and 14.0% in terms of freight transport by 2020.

The government's focus on developing seaports with an aim to increase trade volume in the country is expected to drive growth in the infrastructure construction market over the forecast period. The government’s focus on developing seaports with an aim to increase trade volume in the country is expected to drive growth in the infrastructure construction market over the forecast period.

Investments in Residential Sector

The government's effort to bridge the gap between demand and supply for affordable housing in the country is expected to support the market's growth over the forecast period. Strong economic growth has generally led to rising income levels, which in turn has resulted in an increase in demand for higher-end residential real estate, especially in dense urban areas such as Hanoi and Ho Chi Minh City.

The government's effort to bridge the gap between demand and supply for affordable housing in the country is expected to support the market's growth over the forecast period. Accordingly, it launched various social housing programs such as the Housing for Poor Rural Families Program, low-rent housing for industrial zone employees, and low-income urban social housing-local government.

In Aug 2020, a USD 9.3 billion residential and tourism development project has been approved within the buffer zone of the Can Gio Mangrove Biosphere Reserve. The project was proposed by the Can Gio Tourism Urban Area Joint Stock Company, a subsidiary of Vinhomes, the real estate arm of Vingroup, the country’s largest private company. The Can Gio Tourist City would span 2,870 hectares (7,100 acres), largely on land that would be filled in along the South China Sea coast using sand.

The projected completion date for the Vinhomes development is 2031, when planners expect 230,000 people will live there long-term, and about 9 million tourists will come and go annually. In comparison, just over 70,000 people currently live in Can Gio , the largest of Ho Chi Minh City’s 24 districts by area.

Competitive Landscape

The Vietnam construction market is highly competitive, with the presence of local and international players. The Vietnam construction market presents opportunities for growth during the forecast period, which is expected to further drive market competition. With a few players holding a significant share, the Vietnami construction market has observable level of consolidation.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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