As of the fourth quarter of 2022, the performance of real estate businesses (real estate) showed many positive signs of recovery. According to batdongsan.com, in the medium and long term, Vietnam's real estate market will be supported by many factors such as GDP continues to grow steadily, FDI disbursement activity is stable over the years.
Source: WorldBank, General Statistics Office, BCG, Wearsocial
Many construction enterprises are promoting to increase the coverage and ability to provide services in provinces outside the major central areas such as Hanoi and Ho Chi Minh City. Ho Chi Minh. Development trend in satellite/local cities near Hanoi and Ho Chi Minh City. Ho Chi Minh City became popular due to: scarcity of land in the inner city, the trend of gradually expanding population density in large urban areas (in which the policy of population distribution in neighboring satellite towns, fund inner city land for office systems, commercial and service centers).
In the period of 2021-2030, many localities have the orientation to expand their boundaries, establish new Administrative - Economic Centers, thereby strongly attracting project development activities and bringing great sources of jobs for businesses. construction industry.
In the newly updated report, Vietcombank Securities (VCBS) assesses that the prospect of 2023 for the construction industry will be sharply divided among business groups.
High-rise civil construction and industrial construction benefit in 2023
VCBS believes that “conditions for construction activities will be significantly improved” in 2023 with the workforce basically returning to a stable level. In addition, the weather cycle is forecasted to change to El Nino state (with low rainfall characteristics), creating favorable conditions for construction activities, especially in transport infrastructure projects.
Especially, since the third quarter of 2022, the price of some construction materials (especially steel) has recorded a significant decrease. VCBS expects steel prices will not record a new uptrend in 2023 thanks to low world steel demand while the supply chain is resumed after the pandemic. Lower material prices are expected to have a positive impact on profit margins of construction businesses.
However, VCBS emphasized that there will be a divergence between the groups of businesses, as the civil construction group (especially high-rise projects) and industrial construction will benefit significantly due to the steel materials/ corrugated iron accounts for a high proportion in the cost structure. The profit margin of the above enterprises is expected to improve when contracts with suppliers are adjusted to the new unit prices. For infrastructure construction enterprises (especially expressway projects), the impact will be quite limited because materials account for a high proportion of the total cost (filling earth, leveling sand, stone, etc.) prices are still in an uptrend.
Accordingly, in 2022, Viettel Construction has prepared resources and anticipates the trend when it officially announced the expansion of the civil construction field from low-rise buildings to include the high-rise, industrial, and residential building segments. factories and transport infrastructure.
According to VCBS, investors of large-scale projects (large urban areas, complex areas), etc. will tend to use the services of many contractors in different subdivisions/contract packages. On the one hand, this helps to increase the opportunity for contractors to participate in large-scale projects, but the negotiating position and profit margins of enterprises are expected to be significantly affected. From here, some businesses that have the advantage that will keep a certain stability in the new competitive context are those that have long-term and close relationships with large real estate investors or are in the ecosystem of the Investor.
VCBS believes that new construction and installation bidding packages in the investment cycle 2021 - 2025 will focus more on businesses with large scale and financial potential and do not rely too much on financial loans for operations. construction. Businesses also need to be able to take advantage of participating in infrastructure projects to improve other business activities.
Public investment will be a bright spot in 2023
On December 23, 2022, in Hanoi, the construction industry held a conference to review the work in 2022 and deploy the tasks in 2023.
The report at the conference showed that the growth rate of the construction industry in 2022 is estimated at 8.5%. Compared to 2021, the national urbanization rate is estimated at 41.7%, up 1.2%; the rate of urban planning general planning reaches 100%. Regarding construction materials, the value of cement production is estimated at 85.36 million tons, down 9.92%, consuming 87.31 million tons, down 9.81%; production output of ceramic tiles reached 471.5 million m2, an increase of 8.39%, consumption volume was about 459 million m2 up 16.2%…
Accordingly, in 2023, Vietnam's construction industry aims to achieve a growth rate of 6.5-7% in construction; the national urbanization rate by urban/urban area is estimated at 42.6%; the national urbanization rate by urban area is estimated at 53.9%.
On February 7, 2023, Deputy Prime Minister Tran Hong Ha signed Directive No. 04/CT-TTg on orientations for development of rural architectural planning in Vietnam, creating identity and preserving traditional architecture. system.
The directive mentions the need to research and propose architectural models of houses in rural areas, focusing on small and medium-sized houses, making good use of locally available materials, applying using new technologies and materials to help reduce construction costs in line with the economic ability of the majority of rural people. Towards modern house models, which are close to urban living standards, but inherit typical traditional architectural features and are especially sustainable, energy-saving and environmentally friendly.
Upgrade urban services in rural areas towards urban standards to support urbanization and economic development. To study the planning on the arrangement of rural residential areas in association with the planning of service industry construction and urban development in the regions.
According to VNDirect's analysis report, public investment disbursement in 2023 will grow by 20-25% over the same period. Infrastructure development is highly appreciated in the coming year when the problems of shortage of stone, sand and price of construction materials have almost been solved.
The first 12 bidding packages at the North-South Expressway phase 2 with a total value of 52,280 billion VND were officially started on January 1, 2023. The remaining 13 bidding packages at the North-South Expressway phase 2, Ring Road 3 (HCM City) and Ring Road 4 (Hanoi) are also expected to start construction in the first half of 2023.
North-South Expressway phase 2 will be the main highlight
In order to compensate for the decline of other growth drivers, the Government has announced the 2023 budget estimate, in which the investment capital from the state budget (also known as public investment) is estimated at 698,867 billion VND. VND, up 28.9% compared to the previous year's plan. This figure includes capital allocated to projects under the Socio-Economic Development and Recovery Program. Disbursement of public investment capital in 2023 will increase by 20-25% compared to disbursement, in fact in 2022 thanks to the bottleneck of shortage of construction stone and backfill soil that has been resolved when the Government grants mining permits for new mines; and prices of construction materials such as iron and steel, cement, and construction stone are forecast to decrease next year.
According to the Ministry of Transport, a series of key transport infrastructure projects will be started from the beginning of 2023, including: North-South Expressway phase 2 (January 2023); passenger terminal and airport runway at Long Thanh Airport (January 2023); Expressway Bien Hoa - Vung Tau (April 2023) and expressway Khanh Hoa - Buon Ma Thuot (June 2023). Meanwhile, 11 component projects of the North-South Expressway phase 1 will still be accelerated construction and completed in the period 2022-2024 respectively.