The construction industry in Vietnam is considered an important pillar of its economy. It has enjoyed the highest revenue growth rate among all the other major industries in recent years. The market was valued at almost 60 billion USD in 2021. In the first half of 2022, Vietnam’s construction industry growth rate reached 5.59%. It is considered the best performing construction market in the Asia Pacific region.
The contribution of the construction industry to Vietnam’s total GDP was at 5.95% last year, or close to 500 trillion Vietnamese dong. The country is also the largest infrastructure spender in Southeast Asia by percentage of GDP. The government’s focus on infrastructure as a pillar of economic development has spurred large investments in the sector.
How can the growth of Vietnam’s construction industry continue? What else can the public and private sectors do to increase the productivity and profitability of its various segments? We look at the opportunities in the country’s robust construction industry.
According to reports on Vietnam’s construction industry, more than 20% of projects were halted or delayed due to the various waves of the COVID-19 pandemic that swept the country. However, compared to its neighbors, Vietnam was able to manage the spread of the pandemic well. It remained to be the region’s top performing construction market. Last year, more than 53% of construction firms in the country expected higher revenues compared to 2020.
As government reforms continued to strengthen the growth of the construction industry in Vietnam, it has also attracted more foreign investments. The Vietnamese housing market has seen tremendous growth in recent years, with many new residential buildings selling out all units shortly after they went on sale.
Demand for residential properties now outpace the supply in Vietnam. High-rise apartment buildings are now becoming more common outside of the capital city of Hanoi, and Ho Chi Minh City is also developing plans for increasing the proportion of rental housing for the next 30 years.
Since 2018, the development of smart cities has been prioritized by the Vietnamese government, spending more of its GDP on construction projects that are expected to drive economic development. According to Case Studies for Vietnam’s Smart Cities by YCP SOlidiance, several district-level townships in Ho Chi Minh City that integrate smart technologies and environmental infrastructure solutions are already underway and awaiting handover. Other cities, like Da Nang and Can Tho, have their own smart city roadmaps, with specific infrastructure and digital solutions for their respective areas.
Construction companies in Vietnam are also expanding their services by diversifying and including real estate, hydropower, and renewable energy projects to their portfolios. This will help increase the industry’s overall revenue and keep attracting investments for contractors in the country.
The growth of Vietnam’s construction industry is expected to continue, in part due to continuous infrastructure development projects of the government. The country continues to invest in improving its population’s quality of life and adopting sustainable solutions to meet their needs.