Vietnam's economy is poised for a significant turnaround as we enter 2025, especially within its construction and real estate sectors. The period following the pandemic has seen challenges, but recent policy changes and expert forecasts suggest strong recovery is on the horizon.
After experiencing setbacks from natural disasters and rising operational costs, such as construction interruptions caused by storm activity like Storm No. 3 which hit northern provinces in September 2024, the Vietnamese construction industry is awakening with cautious optimism. According to data from the Vietnamese General Statistics Office, almost 30% of construction companies reported favorable conditions for their business operations heading toward the last quarter of 2024.
Statistics indicate 29.9% of construction businesses felt encouraged about their situation, contrasting with 43.8% reporting stability and 26.3% facing more difficulties. Looking forward, predictions for the first quarter of 2025 suggest even greater challenges, with 31.4% anticipating tougher times. Nevertheless, around 74.7% of companies expect the number of new construction contracts to either increase or remain stable.
Experts have expressed confidence about what lies ahead. Nguyễn Văn Đính, Vice Chairman of the Vietnam Real Estate Association, remarked, "The implementation of new land and housing laws will strengthen the real estate market." This legislative overhaul has set the stage for enhanced market dynamics, energizing confidence among stakeholders.
2024 marked a pivotal moment for Vietnam's real estate scene as various new policies were introduced earlier than expected. The Real Estate Law, Land Law, and Business Laws have provided organizations with clearer guidelines and helped remove significant bureaucratic roadblocks, setting to take effect from August 1, 2024.
According to Võ Huỳnh Tấn Kiệt, Director at CBRE Vietnam, "2025 marks the beginning of strong recovery, especially for major cities like Hanoi and Ho Chi Minh City." He outlined expectations for new housing projects, estimating 25,000 to 30,000 residential units will be available from properties in Hanoi, which will drive market activity.
While demand remains resilient, the need for adequate supply pressures pricing. Industry leaders predict upward trends in real estate prices as the availability of products cannot meet immediate demand. Kiệt points to factors such as location and consumer interest as pivotal for maintaining market stability and boosting sales momentum amid constrained supply.
There are challenges to surmount, for both existing companies and newcomers. Firms voice concerns about rising raw material costs, where 45.7% of respondents report difficulties due to increased pricing pressures on construction materials. This sentiment aligns with reports showing 76.1% of businesses sought loans during the fourth quarter of 2024 to power their recovery efforts.
The government is aware of the difficulties facing companies, from supply chain issues to labor shortages exacerbated by historical regulations. Calls from 46.3% of construction businesses among others stress the need for clear information concerning project opportunities and material sourcing at fair prices, alongside financial support mechanisms such as preferential loans.
Plans for 2025 indicate enhanced governmental roles and incentives especially toward public investment which industry leaders believe can stimulate growth. They're anticipating resolutions to legal matters affecting housing--a key social issue as societies grapple with emergent urban dilemmas.
Experts have also highlighted the importance of attracting foreign investments to drive growth across sectors, particularly real estate segments involving industrial and luxury accommodations. Enhanced policies to accommodate these investments are seen as conducive to economic health.
The expectation for market improvement mirrors broader government initiatives fostering strong urban ties and infrastructure improvements across Vietnam. With Hanoi and Ho Chi Minh City remaining the torchbearers of economic stability, the ambition is for these hubs to overall influence the national economy’s performance through integrated growth strategies.
All factors considered—the historical backdrop, current dynamics, and potential legal adjustments—Vietnam's 2025 economic and business trends look promising as new frameworks emerge, encouraging investment and igniting hopes for substantial recovery.
With the economy on the mend and stakeholders mobilizing for progress, the coming year is set to be transformative for Vietnam's economic outlook, paving the way for potential long-term prosperity.