21 December 2023

Report | Vietnam
Construction Outlook, December 2023

◼ We forecast total construction work done to grow 5.3% in 2023 and a further 4.1% in 2024. Vital
support will come from strong exports, progress on large public projects in the commercial and
civil engineering sectors, and ongoing fiscal stimulus. However, uncertainty around global
growth and a cautious outlook for trade will act to place downward pressure on demand. There
remains a downside risk to the outlook should elevated input costs and weakened investor
confidence persist, weighing further on demand. Total work done is forecast to grow an
average 11.3% p.a. over the three years to 2027.
◼ We forecast residential building work done to contract 3.1% in 2023 but rebound 9.3% in 2024.
Uncertainty around the real estate sector has led to poor buyer sentiment and developer caution.
Although there is a strong and growing pipeline of apartments within HCMC and Ha Noi,
government interventions and regulatory bottlenecks have stymied progress with a number of
projects on hold. There remains significant downside risk should further financial restrictions be
implemented.
◼ We expect non-residential building work done to lift a strong 9.9% in 2023 and surge 16.0% in
2024. Commercial and industrial building will be supported by a recovery in the external sector,
with a recovery in inbound tourism and improved export performance. Social building will
continue to be driven by public investment infrastructure developments. Over the forecast
horizon, robust FDI and the government's 2021-2030 urbanisation masterplan is expected to
provide support.
◼ We forecast civil engineering work done to grow 10.4% in 2023 but decline 5.2% in
2024. Infrastructure development following the implementation of "Resolution No.43" (R43) is
set to drive activity over the forecast horizon.

Table 1: Summary Statistics

Key Indicators
(Annual percentage change)
2022 2023 2024 2025 2026 2027
Total work done 8.2 5.3 4.1 11.3 11.8 10.7
Residential work done 7.4 -3.1 9.3 20.9 17.9 14.6
Single Family 4.8 -2.5 8.7 20.3 17.7 14.2
Multi Family 120.5 -15.9 23.2 33.5 21.5 21.1
Non-residential work done 7.3 9.9 16.0 14.6 18.4 16.3
Commercial 5.5 11.2 17.9 14.4 19.3 16.0
Industrial 8.2 8.4 15.7 16.0 15.9 16.9
Social 7.6 10.6 10.9 10.5 23.5 16.6
Other 9.3 9.6 16.5 15.7 17.7 15.4
Civil engineering work done 9.3 10.4 -5.2 1.2 1.3 1.7
Road 11.6 12.3 -4.7 0.8 0.8 1.8
Other Transport 8.3 11.1 -3.9 2.9 2.1 -0.6
Utilities 7.1 6.6 -9.1 -1.3 0.3 6.6
Other Civil Engineering 7.6 9.4 -2.3 3.3 2.5 -1.5
Implicit Price Deflator 7.8 2.5 4.5 4.0 5.5 5.8
Source: Oxford Economics, Census & Statistics Department

April Skinner - Senior Economist - askinner@oxfordeconomics.com

Ryan Lee - Economic Analyst - ryanlee@oxfordeconomics.com
Construction Outlook, December 2023

Forecast Overview However, tight global credit conditions in key

export partners and slowing domestic demand is
Macroeconomic Outlook expected to crimp business investments.

We forecast Vietnam's GDP to grow 4.7% in 2023, Chart 2: Construction activity forecasts are
up from a previous 3.9%, and a further 5.0% in upgraded over Q3 2023
2024. This is off the back of stronger-than-
expected growth at 5.3% y/y in Q3 2023. This
was primarily driven by a significant rebound in
the manufacturing sector amid the improving
export performance, and continued strength in
the services sector backed by a strong tourism
recovery. The government also ramped up public
investment in Q3 more than we expected, which
will feed through to stronger domestic demand.
However, we remain cautious about Vietnam’s
trade outlook as global growth is expected to
eventually slow in a higher interest rate world. Source: General Statistics Office / Oxford Economics
Adverse climatic conditions also pose a growing
risk to our outlook, as a prolonged heatwave has Vietnam’s property sector continues to be
heightened the threat of drought and caused plagued by a credit crunch which act to shake
power disruptions in industrial parks. investor confidence. This is anticipated to deter
and delay investments as the macroeconomic
Chart 1: GDP is forecast to increase 4.7% in 2023
and political instabilities persist. Nonetheless,
advances in the tourism sector with China’s
border reopening and public investment is
expected to prop up activity over the longer-term
outlook. Ongoing fiscal stimulus from the
government and returning private consumption
is anticipated to provide additional assistance to
the sector. As such, we forecast total construction
to grow a robust 11.3% p.a. on average over the
three years to 2027.
Chart 3: Implicit price deflator growth

Source: Oxford Economics / Haver Analytics / General

Statistical Office

Total Construction Outlook

We forecast total construction work done to
grow 5.3% over 2023, up from our previous
expectation of 3.2% growth. Activity is then
forecast to gain a further 4.1% in 2024. Activity
continued to gather momentum as it lifted 9.1%
y/y in Q3, supported by the gradual release of
pent-up demand and work progressing on a
strong backlog of projects. Over 2023, growth will Source: Oxford Economics
be underpinned by civil engineering construction We expect the total construction implicit price
(+11.7%), and non-residential building (+9.9%), deflator (IPD) to grow 2.5% over 2023 and a
while residential building (-2.4%) will detract further 4.5% in 2024. Construction costs eased
slightly from overall growth. somewhat, declining a slight 0.9% y/y in Q3 2023.
Activity will be supported by a stronger outlook However, levels will remain elevated over the
for exports and acceleration of public investment. short term, which will continue to pull down on

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Construction Outlook, December 2023

demand for construction over the short term.

Cost pressures are anticipated to persist, with
costs forecast to increase an average 5.1% p.a.
over the three years to 2027.

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Construction Outlook, December 2023
Residential Construction Outlook
Residential building work done is forecast to
contract 3.1% over 2023, lower than our previous
forecast of 3.1% growth. While there is a strong
and growing pipeline of apartments within HCMC
and Ha Noi, government interventions and
regulatory bottlenecks have stymied progress
with a number of projects on hold. Tight
domestic financial conditions and heightened
inflationary pressures are also anticipated to
place downward pressure on demand as elevated
costs will cause developments to be more
unappealing.
We expect activity to rebound 9.3% in 2024, as
financial conditions ease and the backlog of
projects unwind. Activity will be underpinned by
growth in regional residential building, most of
which is low density housing. However, the
finalisation of the government’s investigation into
the real estate sector could pose a downside risk
and see a further tightening of financial rules.
Chart 4: Single family building activity will drive
the forecast
Source: General Statistics Office / Oxford Economics
Government investment policies and business
efforts are anticipated to support growth over the
longer term. This will be underpinned by social
housing initiatives such as Ha Noi's Department
of Construction plan to build 44 million sqm of
housing between 2021-2025, with a further 108
million sqm expected to be developed in HCMC
from 2021-2030.
Vietnam’s strong underlying fundamentals will
also support residential building activity out to
2026. Economic and population growth, pent-up
demand, urbanization and a rapidly expanding
middle-income group will continue to underpin
growth. Support will also stem from
improvements to construction and affordable
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housing investment laws. While the focus
continues to be on the five top tier cities, we
expect building activity in tier 2 cities to increase
over the outlook amid improving infrastructure
connectivity. As such, residential building work
done is forecast to average growth of 17.8% p.a.
over the three years to 2027.
Single family work done is forecast to decline
2.5% over 2023 but recover 8.7% in 2024. Due
to Vietnam's geographical climate, many people
still live in farming villages. However, with the
robust economic growth experienced in previous
years, more people are moving to the major
cities. As a result, to account for increased
population density, developers are constructing
tall single-family properties. In addition, many
urban properties constructed to house single
households have been remodelled to
accommodate multiple. Activity is forecast to
increase by an average 17.4% p.a. over the three
years to 2027.
Chart 5: Residential construction work done is
forecast to decline 3.1% over 2023
Source: General Statistics Office / Oxford Economics
Multi-family work done is anticipated to fall
back a significant 15.9% over 2023. Government
reforms targeting project transparency and
building quality have created lengthy wait times
for projects. Higher costs have placed heavier
burdens on developers and weighed on activity
in the near term. However, this backlog is
expected to clear as the government makes
deliberate efforts to progress on project
approvals. New policies reducing time restrictions
on foreign ownership of apartments will also
attract foreign investment flows and further
support recovery over the medium term. This will
see growth rebound 23.2% in 2024.
Over the longer term, Vietnam's rapidly
burgeoning middle class and high population
Construction Outlook, December 2023

density in its metropolitan areas have incentivised

private sector developers to shift their agenda to
accommodate this growing demand with the
construction of mixed-use apartment complexes.
Notable projects supportive include the Cadia
Qui Nhon mixed-use development and the Binh
Nguyen urban area LDG Sky apartment complex.
Activity is thus forecast to increase by 25.2% p.a.
on average over the three years to 2027.

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Construction Outlook, December 2023

Non-residential Construction Growth over the longer term outlook will be

Outlook
Non-residential building work done is
anticipated to grow 9.9% over 2023, up from our
previous forecast of 3.0%. Activity is expected to
continue to surge, growing 16.0% in 2024. This
will be largely supported by foreign direct
investment. The bulk of the activity will stem from
commercial building (+11.2%), followed by social
(+10.6%), 'other non-residential' (+9.6%) and
industrial (+8.4%) building. The sector will find
support from improving domestic consumption
and tourism demand.
Chart 6: Commercial building construction is
forecast to lead growth in 2023
underpinned by the national master plan,
whereby Vietnam aims to become an upper
middle-income country with a modern industrial
base by 2030. The country is anticipated to
undergo rapid urbanisation with plans to target
national digital transformation, construction of
cultural and social infrastructure and adaptation
to climate change policies. The nation also strives
to develop economic corridors connecting
seaports, airports, major trading hubs and
economic centres to accommodate growth and
enhance the national economy's self-reliance.
This is expected to primarily facilitate the
development of commercial and industrial
projects and will see non-residential activity
remain strong over the three years to 2027,
expanding an average 16.4% p.a.

Source: General Statistics Office / Oxford Economics

However, a cooling in external demand amid

tighter global credit conditions will act as a
downside risk to the outlook and hamper activity.
In addition, tighter financial conditions and poor
investor confidence will pull down on activity as
projects are postponed or delayed with FDI
already on a downward trend.
Chart 7: Non-residential construction work done
is forecast to increase 9.9% in 2023

Source: General Statistics Office / Oxford Economics

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Construction Outlook, December 2023
Commercial Construction Outlook
Commercial building work done is expected to
increase 11.2% in 2023 and continue to surge
17.9% in 2024, supported by progress on a
strong pipeline of projects. A further easing in
travel restrictions will be boost demand as retail
sales strengthen and international tourism
continues to recover.
Over the longer-term, activity will continue to
find support from tourism arrivals as well as
strong FDI. This will see commercial building
increase an average 16.5% p.a. over the three
years to 2027. However, this recovery will be
limited by the declining outlook in external
demand, dissipating re-opening tailwinds and
tightening financial conditions.
Chart 8: Easing restrictions will aid the recovery
of the sector
Source: Oxford Economics
Office building work done is forecast to lift a
further 10.9% in 2023. Returns on investment in
the office market remain attractive, with foreign
investors selecting Vietnam as a location for
development and business expansion activities as
office infrastructure is becoming more developed.
Demand for offices will be primarily underpinned
by multinational corporations seeking presence in
CBDs where a shifting importance is placed
towards a working environment that is highly
flexible, adaptable and well optimized for space.
Additionally, renovating and upgrading office
spaces to meet ESG criteria will provide further
essential support to the sector. This is in
alignment with the nation's 2030 action plan for
sustainable development and urbanisation
masterplan, where demand over the outlook will
be derived from the ICT sector.
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Chart 9: Commercial construction work done is
forecast to increase 11.2% in 2023
Source: Oxford Economics
Retail building work done is expected to
improve 9.6% over 2023, supported by the
gradual reopening of the global economy and a
robust return of tourist arrivals. Retail sales
continued to rebound over Q3 2023, growing a
strong 6.4% y/y, whilst the nation welcomed an
additional 2.0mn international visitors when
compared to the same quarter in 2022. A large
pipeline of mall developments will support
activity over the outlook, with a growing trend in
mall upgrades and renovations providing
essential assistance to the sector.
However, tight financial conditions are expected
to weigh on real incomes and uncertainty about
the growth outlook will drag on consumer
sentiment. Even so, this will be partially offset by
increased mobility as the easing of restrictions is
fully realised. Longer term activity will be
underpinned by an inflow of investment from
well-known international retailers, with a focus on
large-scale ‘all-in-one’ stores, and the USD1.5bn
Central Retail Group expansion.
Hotel building work done is set to grow a
strong 17.7% in 2023. International arrivals
continued to recover 15.1% q/q in Q3, whilst
domestic tourism in major cities is expected to
continue to assist the upturn. Both are expected
to support demand over the short term.
Over the medium to longer term outlook, the
lagged effects of promotional efforts and
increasing public investment in tourism-related
infrastructure will also encourage renewed
investment interest in large hospitality and resort
developments. Additionally, business tourism will
also be accommodative of growth as major cities
look to facilitate more MICE events over the
outlook.
Construction Outlook, December 2023
Industrial Construction Outlook
Industrial building work done is forecast to lift
8.4% over 2023 and lift a further 15.7% in 2024.
Key industries such as car manufacturing,
electronic components and e-commerce along
with the nation's investment policies in key
economic regions is expected to underpin
growth. This has seen manufacturing industrial
production index grow 4.2% y/y over Q3 2023.
Some momentum will also stem from the passing
of "Decision 667" in June 2022 which saw foreign
demand strengthen as manufacturing FDI surged
over H2 2022 while CAPEX from the 2022-2023
social-economic recovery program will provide
additional support. However, reduced business
confidence remains a downside risk to the
outlook amidst uncertainty around the global
economic outlook. Higher-for-longer interest
rates in key export partners will drag on export
demand in 2024, crimping private investments.
Over the longer term, the Indo-Pacific Economic
Framework (IPEF) points to an upside risk
as Vietnam’s participation in the program is
anticipated to help encourage further FDI into the
sector. Activity will be primarily supported by the
development of industrial parks and economic
regions in accordance with the country's
urbanisation masterplan. Accordingly, the sector
will receive government support and strong FDI
inflows towards developing transport
infrastructure to improve connectivity among the
regions, supporting the logistics sector. This will
see industrial building grow an average 16.2%
p.a. over the three years to 2027.
Chart 10: Vietnam's urbanisation masterplan will
support the outlook
Source: Oxford Economics
Factory building work done is anticipated to
grow 9.0% in 2023, supported by projects such as
the VND23.6tn LEGO factory scheduled for
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completion in 2024, the BYD car manufacturing
plant and the Phu An Thanh Industrial Park.
Vietnam's commitment towards transitioning to
renewable energy sources, with an aim to achieve
carbon neutrality by 2050, will spur developments
such as the construction of a VND875.0bn
biomass power plant in Hậu Giang. In addition,
this vision will also promote future sector
developments to employ an eco-industrial park
model with an aim for green, smart and
sustainable orientation.
Momentum in demand for electronics and the
EV-production race is expected to underpin
activity over the remainder of the outlook. FDI is
expected to support this growth, with inflows
stemming from US-China tensions and the
resulting diversion of supply chains out of China.
Additionally, Vietnam’s signing of the ASEAN
Comprehensive Investment Agreement (ACIA)
and Regional Comprehensive Economic
Partnership (RCEP), as well as various other
bilateral trade agreements, will prompt further
FDI into the sector.
Chart 11: Industrial building work done is
forecast to increase 8.4% in 2023
Source: Oxford Economics
Warehouse building work done is forecast to
grow 7.4% in 2023. Demand from e-commerce
driven by strong retail sales and an increasing
preference towards ready-built warehouses will
be supportive of growth over the short term.
However, consumer sentiment remains subdued
amidst uncertainty about growth outlook. Over
the longer-term outlook, data centres and major
cities looking to develop larger cold storage
systems and smart warehouse spaces that are
close to the city centres is expected to drive
activity.
Construction Outlook, December 2023

Social Construction Outlook Chart 13: Social building work done is forecast
to increase 10.6% in 2023
Social building work done is forecast to grow
10.6% over 2023 and a further 10.9% over 2024,
supported by strong public investment in social
infrastructure. Activity is expected to remain
robust over the longer-term outlook, with
sustained elevated government disbursements
towards developing education and healthcare
facilities. This will see activity remain strong over
the three years to 2027, averaging 16.7% p.a.
Chart 12: Government expenditure will support
social building over the long term

Source: Oxford Economics

Health building work is set to grow a modest

Source: Oxford Economics
Education building work done is expected to
continue to grow, lifting 12.2% over 2023. The
sector is expected to be supported by a final
push of public investment before year-end to
prop up growth. Investment into the construction
of job training centres as part of the
government's economic recovery package for
2022-23 will provide some further support. Over
the outlook, growth is expected to strengthen as
the education sector continues to receive a
significant growing share of government funding.
Under Resolution 37 and Article 96 of the Law on
Education, the state should ensure at least 20% of
total budget expenditures are allocated towards
education and vocational training.
8.9% in 2023, supported by a final push in
government investment before year-end. Growth
will be underpinned by momentum from the
2022-23 economic recovery package, with
upwards of VND14.0tn assigned for building or
renovating medical facilities. Over the longer
term, healthcare spending is expected to
substantially lift as the government places
increased efforts to make healthcare more
accessible and affordable to accommodate the
country's aging population and growing
population size. However, supply chain
constraints and rising input costs will be the main
challenges facing the sector, acting as a downside
risk to the outlook. Several key hospital projects
slated for completion in the next five years
include the seven healthcare service projects in
Da Nang by Vinmec, the Tan Kien Medical
Complex in Binh Chanh, the VND6.0tn 12
international standard hospitals and Cu Chi
Hospital development.

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Construction Outlook, December 2023

Other Non-residential Construction Chart 15: Other non-residential building is

forecast to increase 9.6% in 2023
Outlook
Other non-residential building consists of all
other buildings not classified elsewhere. Work
done is forecast to grow 9.6% over 2023 and
surge a further 16.5% in 2024. The sector will find
some support from works stemming from the
2021-2030 masterplan developments, where the
country plans to construct 6 new airports in a bid
to relieve pressure from neighbouring airports
and make tourism an economic pillar
for Vietnam. Construction is underway on Phase I
of Long Thành International Airport, with the
project slated expected to be completed by 2025 Source: Oxford Economics
despite the risk of delays.
Chart 14: Building surrounding key masterplan
developments will support other non-residential
building activity

Source: Oxford Economics

The signing of an "Investment Agreement"

between Aeon Group and People's Committee of
Hoc Mon District (HCMC) is anticipated to
provide additional support to the sector. Demand
will be underpinned by works stemming from the
development of the area and synchronous
infrastructure developments such as Ring Road 3,
Moc Bai expressway and the interurban railway.
Further expansions (Phase II and III) to the Long
Thành International Airport terminal will support
activity over the long-term. Additional projects
including the construction of a VND16.0tn third
terminal for Tan Son Nhat International Airport
and expansion works on Dien Bien Airport, is
anticipated to provide some additional support.
‘Other non-residential’ building work done is
forecast to increase an average 16.2% p.a. over
the three years to 2027.

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Construction Outlook, December 2023

Civil Engineering Construction quality and connectivity across the country.

Growth over the longer term will be spurred by
Outlook upgrade works on the National Highway 6
project with an expected completion date of 2027
Civil engineering work done is forecast to
and costing VND8.1tn. Additionally, the
strengthen 10.4% over 2023, up from a previously
government has also announced plans in June
expected 3.3% growth. Growth is then expected
2022 to build 4,000km in new roads via PPP
to moderate, falling back 5.2% in 2024. Support
contracts by 2030, which will provide additional
will stem from a robust pipeline of infrastructure
assistance to the sector.
projects and a final push in public investment
before year end. Sustained government spending Chart 17: Civil engineering construction work
is expected to underpin activity over the outlook done is forecast to increase 10.4% in 2023
which is anticipated to assist the country’s long-
term economic growth agenda, stimulate the
local economy and improve transport networks.
The government commitment to speed up
infrastructure projects, improve connectivity and
spur socio-economic development has also
resulted in the passing of R45 and Decision 667,
both of which will support building activity over
the longer-term. As a result, work done is
expected to average growth of 1.4% p.a. over the
three years to 2027.
Despite the public sector’s appetite to increase Source: General Statistics Office / Oxford Economics
construction, downside risks remain should cost
pressures persist, due to pre-existing Other transport construction work done is
infrastructure bottlenecks. This could delay public forecast to increase 11.1% over 2023. The sector
investment projects, dampening the longer-term will find support from notable projects such as
outlook for activity. the VND34.5tn Nhổn-Ha Noi Railway Station line.
However, this project has been pushed back 4
Chart 16: Government expenditure will support years due to delays caused by the pandemic and
civil engineering work done over the outlook poor economic conditions, resulting in cost
blowouts. The development is now slated for
completion by 2027.
Utilities construction work done is forecast to
grow a further 6.6% over 2023, before
normalising at an elevated level in 2024. Growth
is expected to remain strong over the outlook as
Vietnam's large population, propelled by the
robust industrialization process, has prompted
the necessity of more power production projects
to accommodate the nation's growing power
demand.
Source: General Statistics Office / Oxford Economics Other civil engineering work done is forecast to
grow 9.4% over 2023. This sector is anticipated to
Roads construction work done growth is
be the nation's fastest growing portion with work
forecast to remain strong, lifting a further 12.3%
stemming from developments such as the
over 2023. Developments on the road transport
National Highway 6 project. These projects will
sector remains a key focus of the government.
also encourage more FDI into non-satellite areas
Activity over the short term will be supported by
such as Nha Trang, Phú Quốc Island and Da Nang
projects such as the second phase of the
which will further support building activity for the
VND52.28tn North-South Expressway, the Belt
sector over the longer term outlook. Additional
Road No.3 development in HCMC and the Belt
assistance will be derived from MoT's earmarked
Road No.4 in Ha Noi, aiming to improve road

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Construction Outlook, December 2023

VND86.0tn network of expressways across the

Mekong Delta with a completion date by 2030,
the VND34.0tn Red River Bridge project in Ha Noi
and the VND22.7tn Dong Dang-Tra Linh
Expressway Phase I project.

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Construction Outlook, December 2023

Long-term drivers of the Construction forecast

Climate Target
Vietnam has committed to reducing greenhouse gas emission levels by 15.8% by 2030. However,
conditional on international support, greenhouse gases could be reduced by 43.5% in 2030. The nation has
further pledged to achieve net zero emissions by 2050.

Demographic Outlook
Population
Vietnam’s population grew at a relatively rapid rate over the 1980s and 1990s, however the pace has
declined in the past decade mainly due to a declining crude birth rate since the mid-1990s, from 5 births
per woman to 2 births per woman. This is due to the implementation of Vietnam’s National Strategy on
Population and Reproductive Health (2011-2020), with the ‘two-child policy’ limiting births. Over the long
run, the pace of population growth is expected to decline further as the effects of economic development,
urbanisation, and lifestyle changes put downward pressure on the birth rate.
Total population in 2022 is estimated at 99.0 million, with the 15-64 age group accounting for 68.4%. The
population growth rate fell to 0.8% in 2022, which is slightly below the 'replacement level' for fertility to
nation is aiming to maintain. We expect population growth to average 0.6% over the three years to 2027.
This will see the population hit 100 million by 2024. The population is expected to peak at around 110
million people in 2054, and then begin declining after 2055.
Chart 18: Annual population growth has remained at 0.8% over the last two years

Source: Oxford Economics / United Nations

With the median age at 31.9 years, the population is relatively young. Moreover, as of 2022, it is estimated
that approximately 41.7% of the population live in urban areas, compared to only about 20% a decade ago,
where the Ministry of Construction predicts this statistic will edge closer towards 45.0% by 2030. This
provides a strong base for underlying housing demand to satiate a growing population. Vietnam’s
emerging middle class, currently accounting for close to a third of the total population, has tripled in size
over the past two decades and is anticipated to continue trending robustly upwards over the outlook.
The rate of household formation is likely to continue to outpace the rate of population growth over the
forecast period, as the trend towards smaller households continues. This typically accompanies economic
development and the urbanisation of the population. The average household size is expected to gradually
decline from its current level of 3.46 people per household to 3.37 by 2027.

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Construction Outlook, December 2023

Table 2: Housing indicators

2022 2027 2032 2037
Population (mn people) 98.2 101.2 103.5 105.2
Housing Stock (mn dwellings) 28.2 30.1 31.9 33.4
People per Household 3.5 3.4 3.3 3.1
Consumer Price Index (2022=100) 100.0 119.0 144.0 176.0
House Prices (2022=100) n/a n/a n/a n/a
Source: Oxford Economics / General Statistics Office of Vietnam / Haver Analytics / United Nations

Urbanisation
38.1mn people (38.8% of Vietnam's population) lived in urban areas in 2022, with the remaining 60.1mn
living in rural areas. We forecast the urban population to decline 2.1% over the ten years to 2032, while the
non-urban population is expected to grow at 0.6% p.a. over the same period.
Table 3: Extent of urbanisation
2022 2027 2032 2037
Urban Population (annualized % change) 2.8 2.2 2.0 1.8
Urban Population (% of total) 38.8 41.9 45.2 48.5
Source: Oxford Economics / World Bank / Haver Analytics / United Nations

Vietnam has one megacity (i.e., a city with a population of over 10mn people), Ho Chi Minh City, which had
a population of 13.6mn in 2022. The next three largest cities are Hanoi (9.5mn), Haiphong (1.5mn), and Da
Nang (1.3mn). Da Nang and Ho Chi Minh City are expected to be the fastest growing cities over the ten
years to 2032 with growth rates of 1.8% and 1.5% p.a., respectively.
Table 4: The largest cities in Vietnam
Location 2022 2027 2032 2037
Ho Chi Minh City (mn) 13.6 14.8 15.8 16.7
Hanoi (mn) 9.5 10.2 10.8 11.2
Haiphong (mn) 1.5 1.5 1.5 1.4
Da Nang (mn) 1.3 1.4 1.5 1.7
Nam Dinh (mn) 1.2 1.2 1.2 1.2
Can Tho (mn) 0.9 0.9 0.9 0.9
Source: Oxford Economics / United Nations / General Statistics Office of Vietnam

Page 14 April Skinner - askinner@oxfordeconomics.com

Construction Outlook, December 2023

Infrastructure Competitiveness
Vietnam was ranked 67th in the World Economic Forum Global Competitiveness 2019 Index, placing it 8th
out of 16 in the Emerging Asia region.
Table 5: World Economic Forum Global Competitiveness 2019 Ranking
World Ranking Regional Ranking
Quality of overall infrastructure 77 9
Quality of transport infrastructure 66 8
Quality of road infrastructure 103 13
Railroad density 58 7
Efficiency of train services 54 8
Efficiency of seaport services 83 10
Efficiency of air transport services 103 11
Quality of utilities infrastructure 87 6
Electricity supply quality 62 9
Mobile-cellular telephone subscriptions per capita 14 2
Mobile-broadband subscriptions per capita 76 9
Source: World Economic Forum

Key Policies
▪ "Resolution Number 43" (R43); VND113.55tn has been allocated towards infrastructure developments
in key emerging sectors. In addition, the passing of "Decision 667" in June 2022, highlighting the
government's strategic intentions in promoting foreign investment over 2022-2030 by
increasing FDI to 70% of total capital disbursed in Vietnam by 2025, will also support building activity
over the forecast horizon.
▪ "Resolution No.06-NQ/BCT"; The Ministry of Construction (MoC) has stated in January 2023 that the
office will focus on implementing the government's action plan on sustainable urban planning,
management, and development which will conclude by 2030. The ministry aims to develop the real
estate market and speed up the planning of urban and rural systems, whilst also promoting the
development of smart sustainable areas over the outlook
▪ Ha Noi’s housing development programme; The initiative aims between 2021-2030 to develop
solutions for sustainable and modern housing which should support the replacement of aging
apartment buildings.

Page 15 April Skinner - askinner@oxfordeconomics.com