Vietnam Construction Market Outlook to 2030

Vietnam Construction Market Overview

• The Vietnam Construction Market size was USD 66.10 billion in 2023, driven by rapid urbanization and substantial government investment in infrastructure projects such as transportation networks and industrial zones. This growth is supported by strong demand across residential, industrial, and commercial construction sectors.
• Major players in the market include Vinhomes, Hoa Binh Construction Group, Coteccons Construction JSC, Delta Construction Group, and FLC Group. These companies lead due to their extensive portfolios in residential and commercial projects, robust partnerships with foreign investors, and their strategic role in key infrastructure developments across Vietnam.
• In 2022, Vinhomes launched a major urban development project named Vinhomes Ocean Park 2, covering 1,200 hectares with an investment of VND 80 trillion (USD 3.5 billion). This project is set to expand the housing and infrastructure in Hanoi, catering to the growing urban population.
• Ho Chi Minh City and Hanoi are the dominant regions for construction activities, driven by their role as economic hubs and the epicenter of infrastructure projects. These cities benefit from government-backed initiatives and foreign direct investments. Ho Chi Minh City, in particular, is experiencing a surge in industrial and residential construction due to the expansion of industrial parks and its proximity to major logistics networks.

Vietnam Construction Market Segmentation

The market is segmented into various factors like application, end-user, and region.

By Application: The market is segmented by application into residential, commercial, industrial, infrastructure (transportation), and energy and utilities. In 2023, infrastructure held the dominant market share due to massive investments in transportation projects such as highways, airports, and metro systems, driven by the governments push to modernize Vietnams urban infrastructure.

By End-User: The market is segmented by end-user into residential, commercial, industrial, and government sectors. In 2023, the residential sector dominated the market, driven by a growing urban population and high demand for affordable housing. Government-backed housing projects and urban development initiatives, such as the Social Housing Scheme.

By Region: The market is segmented by region into North, East, West, and South. In 2023, Southern region dominated the market due to its status as an economic hub, attracting substantial foreign direct investment (FDI) in industrial and infrastructure projects. The regions proximity to major ports and logistics networks, coupled with ongoing industrial zone developments, has made it a focal point for construction activities, contributing to its market dominance.

Vietnam Construction Market Competitive Landscape

• Hoa Binh Construction Group: In February 2024, Hoa Binh Construction Group secured a USD 72 million contract to build 3,400 apartments in Kenya, marking its entry into the African market. This project, aimed at constructing housing for police, military, and students, is part of a larger potential deal worth USD 163.6 million for social housing projects in Kenya
• Coteccons Construction JSC: In 2024, a consortium led by Covestcons Co. Ltd, a subsidiary of Coteccons, bid for a VND 10.66 trillion (USD 418.8 million) residential-commercial project in Long An Province. The project spans 85.19 hectares and is expected to accommodate 4,800 residents, with construction set to begin in 2024 and complete by 2029.

Vietnam Construction Market Analysis

Market Growth Drivers

• Urbanization and Infrastructure Expansion: Vietnam's infrastructure investment is a key growth driver, with the government allocating6% of GDPsignificantly higher than the2.3%average in the region. To sustain economic growth, the country requires$25-30 billionannually, yet the national budget can only cover$15-18 billion, necessitating increased private investment to bridge the$10-15 billiongap.
• Foreign Direct Investment (FDI) Surge: In 2022, Vietnam attracted USD 27.72 billion in FDI, with a significant portion channeled into the construction sector. This influx of foreign capital is directed toward large-scale infrastructure and residential projects, driving market growth.
• Growth in Industrial Zones: The expansion of industrial parks and manufacturing hubs, particularly in Southern Vietnam, has spurred a surge in construction activities. Long An Province is set to accommodate new industrial zones, supporting both residential and commercial construction to meet the needs of growing industries.

Market Challenges

• Rising Material Costs: The construction industry in Vietnam faces rising costs for raw materials, such as cement and steel, due to global supply chain disruptions. In 2023, the price of steel rose by 30%, putting pressure on developers and contractors to manage costs effectively.
• Labor Shortages: Vietnam's construction sector is grappling with a skilled labor shortage, exacerbated by the post-pandemic economic recovery. The lack of qualified workers has led to project delays and increased labor costs, slowing down the pace of ongoing construction activities.

Government Initiatives

• Transport Infrastructure Development Plan (2021-2025): In 2021, Vietnam launched its USD 65 billion Transport Infrastructure Master Plan, aiming to build 5,000 km of new expressways and high-speed railways by 2030. Key projects include the Long Thanh International Airport and Lach Huyen Port expansions, designed to enhance cargo and passenger transport capacity nationwide.

Vietnam Construction Market Future Outlook

The Vietnam construction market is including strong growth over the next five years, driven by infrastructure development, foreign investments, and urbanization. The governments long-term infrastructure initiatives will continue to fuel demand across various construction segments.

Future Market Trends

• Expansion of Green and Sustainable Buildings: With increasing environmental awareness and global sustainability trends, Vietnam's construction industry is expected to adopt more green building certifications and eco-friendly materials. By 2028, the demand for LEED-certified buildings is projected to grow significantly, especially in commercial and industrial construction, driven by both government regulations and investor preference.
• Growth in Urban Infrastructure Development: Vietnams focus on urban infrastructure is set to accelerate, particularly with the governments Transport Infrastructure Master Plan. By 2028, ongoing projects such as Long Thanh International Airport and new expressway developments are expected to enhance connectivity, driving more construction activities in the residential and commercial sectors.