Growing Trends in Construction in Vietnam 2024

Vietnam's construction industry is experiencing rapid growth, fuelled by significant public and private investments, an expanding urban population, and the development of major infrastructure projects. This surge in construction activity is reshaping the landscape and driving demand across various sectors, from residential and commercial buildings to transportation and renewable energy.

Industry Growth and Projections

The construction industry in Vietnam is expected to grow by 7.5% in 2024, buoyed by an increase in transport construction activity and investments in housing and power projects. This growth is part of a broader trend, with the industry anticipated to register an annual average growth of 6.7% from 2025 to 2028. Key factors contributing to this growth include:

• Transport Infrastructure: The Ministry of Transport plans to start 19 transport infrastructure projects in 2024, including 11 expressways.

• Social Housing: The Ministry of Construction aims to build 130,000 social housing units in 2024, as part of a broader goal to develop one million social housing units by 2030.

• Renewable Energy: Investments in renewable energy projects, particularly the Ministry of Industry and Trade's strategy to produce 20 million tonnes of hydrogen per year by 2050.

Major Projects and Investments

Several high-profile projects are set to drive construction activity in Vietnam. For example, the North-South high-speed railway project, requiring VND1.6 quadrillion (approximately $67 billion), will see 30% of its funding sourced from foreign investors. Additionally, the construction of eight metro lines in Ho Chi Minh City, with a total investment of VND587 trillion ($25 billion), is expected to significantly boost the urban transportation infrastructure.

Demand for Construction Materials

The surge in construction projects has led to increased demand for construction materials, particularly building stones. Between 2023 and 2025, the Ministry of Transport estimates that 21.5 million m³ of construction stone will be required for key infrastructure projects, such as Ho Chi Minh City’s Ring Road 3 and the Bien Hoa-Vung Tau highway. This demand is driving growth in the construction materials sector, projected to generate US$13.19 billion in revenue in 2024 with an annual growth rate of 2.57% from 2024 to 2028.

Key quarries like Tan Cang and Thanh Phu are crucial sources of construction stone, with demand expected to increase by 28% and 15-16% year-on-year, respectively.

Regulatory Environment

Vietnam's government has implemented several policies to support the growth of the construction industry while ensuring sustainable practices. Decision 711/QD-TTg outlines the planning for exploration, exploitation, processing, and use of minerals for construction materials from 2021-2030, with a vision to 2050. The Law on Minerals mandates that organisations and individuals engaged in mineral mining activities must use environmentally friendly technology and bear the costs of environmental restoration.

Challenges and Market Dynamics

Despite the optimistic growth projections, the construction industry in Vietnam faces several challenges:

• Economic Fluctuations: The financial health of buyers remains a significant concern, with slow economic growth impacting demand for real estate and construction materials.

• Material Price Volatility: Rising transport costs and limited production facilities have led to increased construction material prices, affecting project costs and timelines.

• Supply Chain Disruptions: Geopolitical tensions and disruptions in freight shipments pose challenges to the supply chain, potentially affecting the availability and cost of materials.

Future Outlook

The need for urban housing and infrastructure development will continue to drive the construction industry in Vietnam. The urban population is projected to reach 45% by 2030, necessitating an additional 70 million square metres of housing annually. Moreover, the expansion of the expressway network and the introduction of green building practices are set to shape the future of the construction landscape in Vietnam.

In conclusion, Vietnam's construction industry is on a robust growth trajectory, supported by substantial investments and a favourable regulatory environment. However, stakeholders must navigate economic and logistical challenges to capitalise on the opportunities in this dynamic market.

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Sources:

https://finance.yahoo.com/news/vietnam-construction-industry-report-2024-233000534.html

https://www.vietnam-briefing.com/news/construction-materials-vietnam-2024-sector-outlook.html/#:~:text=Additionally%2C%20data%20from%20Mordor%20Intelligence,period%20(2024%2D2028).

"Vietnam Construction Market Size, Trends, and Forecasts by Sector - Commercial, Industrial, Infrastructure, Energy and Utilities, Institutional and Residential Market Analysis, 2024-2028," 

"Vietnam Construction Material Sector: Growth Drivers and Challenges," Vietnam Briefing, July 31, 2024.