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Construction in Vietnam - Key Trends and Opportunities to 2019

  • December 2015
  • -
  • Timetric
  • -
  • 71 pages

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Synopsis
In real terms, the Vietnamese construction industry’s output value recorded a compound annual growth rate (CAGR) of 5.27% during the review period (2010–2014).

There was a marked slowdown in 2011, but the general growth trend during the review period was supported by socio-political stability, improving investor confidence, a qualified workforce and improving global economic conditions. Public and private sector investments under ‘Vision 2030’ also supported the construction industry during the review period.

The Vietnamese construction industry is expected to be supported by the government’s investments in infrastructure and housing construction projects over the forecast period (2015–2019).

The government aims to improve its transport network, tourism infrastructure and modernize energy delivery by increasing the volume of renewable schemes. Government efforts to address the country’s housing shortage will also help the industry grow over the next five years, and it is consequently expected to register a CAGR of 6.53%.

Summary
Timetric’s Construction in Vietnam – Key Trends and Opportunities to 2019 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 type of construction activity

- Analysis of equipment, material and service costs for each project type in Vietnam

- Critical insight into the impact of industry trends and issues, and the risks and opportunities they present to participants in Vietnamese construction industry

- Profiles of the leading operators in the Vietnamese construction industry.

- Data highlights of the largest construction projects in Vietnam

Scope
This report provides a comprehensive analysis of the construction industry in Vietnam. It provides:

- Historical (2010–2014) and forecast (2015–2019) valuations of the construction industry in Vietnam using construction output and value-add methods

- Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by project type

- Breakdown of values within each project type, by type of activity (new construction, repair and maintenance, refurbishment and demolition) and by type of cost (materials, equipment and services)

- Analysis of key construction industry issues, including regulation, cost management, funding and pricing

- Detailed profiles of the leading construction companies in Vietnam

Reasons To Buy
- Identify and evaluate market opportunities using Timetric'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 business strategies using Timetric's critical and actionable insight

- Assess business risks, including cost, regulatory and competitive pressures

- Evaluate competitive risk and success factors

Key Highlights
- In 2014, the government signed a directive under the housing development program in Hanoi during 2012–2020, with the vision until 2030. This directive will increase the number of social housing projects in Hanoi by focusing on the construction of residential areas and urban centers in the outskirts of the city. The renovation and reconstruction of downgraded residential buildings and houses will also be included in the program. The plan sets the target to raise the average housing area from 16.7m2 per person in 2009 to 23.1m2 per person by 2015, and 26.3m2 per person by 2020. Such government initiatives will support the growth of the residential construction market over the forecast period.

- To stimulate the sluggish residential market, in July 2013 the government allocated VND30.0 trillion (US$1.4 billion) in bank loan packages for low-income families and housing projects. The home loans are offered for up to 10 years, at an annual interest rate of 6.0%. In a bid to attract more consumers, however, the government reduced the annual interest rate to 5.0% in 2014. In July 2015, the government introduced a new housing law and law on real estate business. The new housing law opens the door for foreign entities and individuals to invest in residential properties. Under the law on real estate business, the government allows foreign entities and individuals to own offices and factories, and allows foreign-invested enterprises to lease office buildings and facilities for commercial purposes. Government efforts to increase the demand for housing property will support the growth of the residential construction market over the forecast period.

- To support the housing market, the Ministry of Finance announced that it would reduce the tax burden applied on the sale and lease of apartments and houses in 2013. Under this, a 50.0% reduction on value added tax (VAT) was implemented for the sale or lease of commercial housing. The new decree came into effect from the end of 2013, and lowered VAT from 10.0% in 2012 to 5.0%. Commercial housing units under 70m2, which value less than VND15.0 million (US$705.0) per square meter, will be qualified for VAT reduction. The introduction of this new decree helps in making housing affordable to low income families and thereby reduces the stock of unoccupied space. According to Ministry of Construction (MOC), the value of inventories at the end of the second quarter was 50% of the value at the beginning of the Therefore, growth in the residential construction market will be driven by the increasing demand for residential property over the forecast period.

- The Vietnamese government allocated VND1.9 quadrillion (US$94.2 billion) for 2011'2030, to develop the country’s tourism sector. Tourism development plans include the modernization of tourism infrastructure in rural and border areas, and islands. In order to provide a diverse range of leisure facilities to meet the lifestyle needs of people in the region Vinpearl, Joint Stock Company is planning to construct a resort in Lien Chieu, Da Nang. This project is expected to be completed by 2020, with investment of VND107.3 trillion (US$5.0 billion). Under public-private partnership with an investment of VND85.9 trillion (US$4.0 billion), the Quang Ninh Province (QNP) is planning to construct an integrated casino and resort complex on a 1,800ha area at the Van Don Economic Zone, Van Yen Commune, Van Don District, Quang Ninh. This project is expected to be completed by 2020. Over the forecast period, growth in the leisure and hospitality category will be driven by government efforts, along with public and private sector investments, to make tourism the country’s leading sector by 2020.

- In 2011, the Ministry of Industry and Trade (MOIT) approved a Power Master Plan-7 (2011'2020). The plan aims to increase the output of imported and produced electricity from 194'210 billion kWh in 2015 to 695'834 billion kWh by 2030, as well as increase the share of renewable energy from 3.5% of the total electricity generated in 2010 to 4.5% in 2020 (and to 6% in 2030), establish the first nuclear power plant by 2020 and increase the capacity of nuclear power to 1,000MW in 2020, to 6,000MW by 2025 and 10,700MW by 2030. A total investment of VND929.7 trillion (US$48.8 billion) will be required up until 2020, and VND1.4 quadrillion (US$75.0 billion) for 2021–2030. These investments are expected to support construction activity in the energy and utilities construction market over the forecast period.

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