Vietnam’s construction industry has seen substantial growth in recent years, driven by robust economic development and significant government investment in infrastructure projects. The sector is highly competitive, featuring both domestic and international players. These companies are actively involved in various large-scale projects across the country, including residential, commercial, and industrial developments.
The construction industry in Vietnam is projected to expand steadily, supported by continued investments in transport infrastructure and energy projects. Foreign direct investment is also playing a crucial role in advancing industrial construction, particularly in the development of production facilities for sectors like automotive and electronics. The market is expected to maintain a positive trajectory, with key opportunities in both public and private sectors over the next decade.
Vietnam’s construction industry in numbers
The Vietnam construction market is projected to grow significantly, with an estimated market size of US$69.20 billion in 2024, reaching US$102.20 billion by 2028. This represents a compound annual growth rate of 8.10 percent over the forecast period, according to data collated by Mordor Intelligence.
This growth is fueled by the country’s robust economic development, increased urbanisation, and substantial government investments in infrastructure projects.
Box 1: Real estate market woes weigh on construction industry
At the beginning of 2023, construction work on buildings in Vietnam was slowly winding down as Vietnam’s real estate industry ground to a halt. Hard hats were hung up and cranes ten stories high fell dormant leaving the cement shells of unfinished residential towers standing dark and empty–cold reminders that Vietnam’s real estate market was not in good shape.
This was due to a number of factors but in short, the Evergrande crisis in China in 2022, had led Vietnam to take a long hard look at its own real estate industry, and what it found was not good. The misuse of investor funds, particularly those acquired through the bond market, was rife, and a number of real estate firms were grossly over-leveraged. These revelations then went on to spook investors and consequently, the market took a sizable downturn…
Read more: Vietnam’s Real Estate Market Recovery 2024: Unpacked
Domestic construction firms in Vietnam
Key domestic construction firms in Vietnam include several well-established companies that play a significant role in the sector.
Coteccons Construction JSC
Coteccons is one of the leading construction firms in Vietnam, known for its extensive portfolio of residential, commercial, and industrial projects. The company is highly regarded for its design and build capabilities, which allow it to deliver world-class projects such as high-rise buildings, hotels, and infrastructure developments.
Hoa Binh Construction Group JSC
Hoa Binh Group is a prominent player in the Vietnamese construction market, with expertise in large-scale residential and commercial projects. Some of their notable works include Sunshine City Saigon and Empire City. The company is recognized for its strong project management and construction capabilities.
DINCO Engineering and Construction Corporation (DINCO E&C)
DINCO E&C specialises in industrial plants, high-rise buildings, and infrastructure projects. The company is well-known among international clients from countries such as the United States, Germany, and Japan. It has a solid reputation for meeting the highest standards in the construction industry.
DELTA Group
DELTA Group is a top contractor in Vietnam, focusing on high-rise buildings and industrial facilities. The company has been involved in numerous prestigious real estate projects and is noted for its advanced construction technology and contractor management.
Newtecons
Newtecons has established itself as a leading construction company with a focus on luxury apartment projects and infrastructure development. The company’s strategic business approach and successful execution of high-profile projects have earned it a spot among the top construction firms in Vietnam.
These companies represent the dynamic and competitive nature of Vietnam’s construction industry, contributing significantly to the country’s economic development and urbanisation efforts.
Box 2: Investing in real estate projects in Vietnam
Investing in real estate projects in Vietnam offers significant opportunities for foreign firms, driven by the country’s economic growth, urbanisation, and rising demand for residential, commercial, and industrial spaces. However, navigating the market requires a thorough understanding of local regulations, investment structures, and cultural nuances.
Read more: Investing in Real Estate Projects in Vietnam for Foreign Firms 2024
Foreign construction firms in Vietnam
These foreign firms have been driving Vietnam’s construction and infrastructure development, contributing expertise, technology, and investment that support the country’s rapid growth
GS Engineering & Construction (South Korea)
GS Engineering & Construction is a major player in Vietnam’s construction sector, involved in various large-scale infrastructure projects, including highways and urban transit systems. The company’s expertise in civil engineering and construction makes it a significant contributor to Vietnam’s development plans.
Hyundai Engineering & Construction (South Korea)
Hyundai Engineering & Construction is active in the Vietnamese market, focusing on projects such as power plants and large infrastructure developments. Their involvement in complex projects highlights their role in enhancing Vietnam’s infrastructure capabilities.
Taisei Corporation (Japan)
Taisei Corporation is engaged in several high-profile projects, including the construction of modern urban buildings and commercial complexes. The company’s contributions are vital in meeting the growing demand for modern infrastructure in Vietnam’s urban areas.
Kajima Corporation (Japan)
Kajima Corporation is involved in the construction of industrial parks and large-scale commercial developments. Their presence in Vietnam reflects the country’s increasing attractiveness for foreign industrial investments.
Bouygues Construction (France)
Bouygues Construction has been active in Vietnam’s transport and urban development projects, contributing to the construction of roads and bridges. Their expertise in sustainable construction practices aligns well with Vietnam’s push for green development.
Siemens (Germany)
Siemens plays a key role in Vietnam’s renewable energy and transportation sectors. The company is involved in several projects aimed at modernising the country’s power grid and developing urban transportation systems.
Fluor Corporation (USA)
Fluor Corporation is involved in industrial construction, including manufacturing plants and energy facilities. Their operations in Vietnam focus on enhancing the country’s industrial infrastructure and meeting the demands of a growing economy.
Chiyoda Corporation (Japan)
Chiyoda Corporation is a prominent player in Vietnam’s oil and gas sector, working on refining and petrochemical projects. Their expertise in this field supports Vietnam’s ambitions to expand its energy sector and reduce reliance on imported fuels.
Box 3: Starting a construction business in Vietnam
Starting a construction business in Vietnam presents many opportunities, as the country’s economic growth and rising incomes are fueling demand for commercial and residential properties as well as large-scale infrastructure projects. However, entering Vietnam’s construction industry can be tricky…
Key challenges for Vietnam’s construction industry
The construction industry in Vietnam faces several key challenges:
Regulatory and Bureaucratic Hurdles
Complex regulations and bureaucratic procedures pose significant challenges for the construction sector. Delays in obtaining permits and navigating legal constraints can hinder project timelines and increase costs. Streamlining these processes and improving transparency could help alleviate these issues and promote smoother operations for both local and foreign companies.
Skilled Labour Shortage
The industry struggles with a shortage of skilled labour, which impacts project efficiency and quality. The demand for specialised workers often outpaces supply, leading to wage inflation and project delays. Addressing this challenge requires investment in vocational training and collaboration between the government and private sector to build a more skilled workforce.
Material Price Fluctuations
Fluctuations in the prices of construction materials, such as steel and cement, create uncertainty and financial pressure for construction companies. These price changes can affect project budgets and profitability, making cost management a critical aspect of successful project execution.
These challenges highlight the need for reforms and strategic investments to ensure the sustainable growth of Vietnam’s construction industry.
What’s next?
The outlook for Vietnam’s construction industry is marked by both opportunities and challenges. On one hand, the a push for infrastructure development and urban expansion is expected to drive demand for construction projects across the country. However, there are notable constraints that could hinder the sector’s progress.
Overall, while the Vietnamese construction industry has the potential for growth, its future will depend heavily on addressing these structural issues and creating a more favourable environment for both local and foreign investors.
With this in mind, foreign construction firms considering doing business in Vietnam should make sure to keep up with the latest updates in the industry by subscribing to the-shiv.