Construction in Vietnam - Key Trends and Opportunities to 2023

Construction in Vietnam - Key Trends and Opportunities to 2023

Summary

Vietnam’s construction industry registered growth of 8.5% in real terms in 2018. This was preceded by an average annual growth rate of 9.3% during the preceding four years. Growth during the review period (2014-2018) was driven by positive developments in regional economic conditions and government investment in energy and transport infrastructure.

The industry’s output value is expected to continue to expand in real terms over the forecast period (2019-2023), with investments in infrastructure construction, tourism infrastructure and housing projects continuing to drive growth. According to the government’s estimates, the country requires an investment of VND1.0 quadrillion (US$48.0 billion) until 2023 to develop its transport infrastructure. In addition, the government’s aim to improve local energy resources is expected to support investment in energy infrastructure projects, which will in turn fuel growth in the industry.

The trade war between the US and China is also expected to divert foreign investment towards Vietnam, a given the relative improvement in the country’s attractiveness as a manufacturing destination. This is likely to have a positive impact on construction industry, particularly in the industrial and logistics sectors.

The industry’s output value in real terms is expected to rise at a compound annual growth rate (CAGR) of 7.87% over the forecast period.

GlobalData’s "Construction in Vietnam - Key Trends and Opportunities to 2023", report provides detailed market analysis, information and insights into the Vietnamese construction industry, including -
- The Vietnamese construction industry's growth prospects by market, project type and construction activity
- Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the Vietnamese construction industry
- Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Key Highlights

- GlobalData expects the residential construction market to account for 42.6% of the industry’s total value in 2023 driven by the country’s rising population, ongoing urbanization and positive developments in regional economic conditions. Market expansion over the forecast period is also expected to be driven by public and private sector investments in the construction of new residential buildings to meet the increasing demand for housing.
- Forecast-period growth in the energy and utilities construction market will be driven by the government’s plan to increase the share of renewable energy in terms of the total energy mix, encouraging investment in renewable energy infrastructure. The government aims to generate 31% of the country’s total consumer primary energy through renewable sources by 2020, 32.3% by 2030 and 44% by 2050. The plan is to generate 3.3% of the country’s total electricity production through solar power by 2030 and 20% by 2050.
- GlobalData expects the infrastructure construction market to record a forecast-period CAGR of 13.96% in nominal terms, supported by the government’s focus on the development of the country’s rail, road, airport and other core transport infrastructure through the PPP model. To cope with a rise in air traffic demand, the Ministry of Transport plans to expand the country’s airport infrastructure. In March 2018, the government announced the expansion plan of Tan Son Nhat International Airport. The plan includes the construction of a new terminal to handle 20 million passengers annually and expand two existing terminals in order to handle 30 million passengers annually by 2025. The total cost of the project is expected to be VND30.0 trillion (US$1.3 billion).
- The industrial market’s growth in the forecast-period will be driven by increases in investments in industrial and manufacturing activities, as well as positive developments in domestic and regional economic conditions. Growth in the market will also be supported by the government’s focus on the development of economic zones and industrial parks in the country. In the first half of 2018, the government approved an investment plan worth VND21.0 trillion (US$921.0 million) to improve the country’s economic zones and industrial parks by 2020.
- The total construction project pipeline in Vietnam - as tracked by GlobalData, and including all mega projects with a value above US$25 million - stands at VND13.4 quadrillion (US$588.6 billion). The pipeline, which includes all projects from pre-planning to execution, is skewed towards early-stage projects, with 63.9% of the pipeline value being in projects in the pre-planning and planning stages as of January 2019.

Scope

This report provides a comprehensive analysis of the construction industry in Vietnam. It provides -
- Historical (2014-2018) and forecast (2019-2023) valuations of the construction industry in Vietnam, featuring details of key growth drivers.
- Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
- Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
- Listings of major projects, in addition to details of leading contractors and consultants.

Reasons to buy

- Identify and evaluate market opportunities using GlobalData's standardized valuation and forecasting methodologies.
- Assess market growth potential at a micro-level with over 600 time-series data forecasts.
- Understand the latest industry and market trends.
- Formulate and validate strategy using GlobalData's critical and actionable insight.
- Assess business risks, including cost, regulatory and competitive pressures.
- Evaluate competitive risk and success factors.