Construction Enterprises Expect Positive Support with Stable Macroeconomic Conditions and Balanced Budgets as the Real Estate Market Moves Past Difficult Times

52.6% of construction enterprises express optimism for positive changes in 2024. (Photo: Tuan Anh/TTXVN)

According to the Vietnam Report Joint Stock Company, which recently published the results of a survey of construction industry leaders, there is a notably optimistic outlook for the sector's prospects in 2024.

The survey results show that 52.6% of enterprises expect 2024 to mark positive changes; 36.9% predict the construction industry will remain relatively unchanged from 2023, and 10.5% foresee a more gloomy market situation.

Overall, the return to growth is not expected to be swift, and it cannot be confirmed that the construction market will achieve outstanding results. However, construction enterprises hope that 2024 could be the "first brick" laying the foundation for recovery and nurturing a new development cycle.

Analyzing external forces, such as policies helping to remove difficulties and support construction enterprises in recovering, Mr. Vu Dang Vinh, General Director of Vietnam Report, noted that the economy has shown signs of recovery since late 2023, with GDP growth rates gradually increasing each quarter. The National Assembly has approved Vietnam's GDP growth target for 2024 at 6%-6.5%.

When interest rates decrease, the burden of loan interest costs lightens, which can help businesses improve their profit margins. 

Construction enterprises expect that the coming period will see positive support factors, with stable and recovering macroeconomic conditions, ensured major balances, the real estate market moving past its most challenging times, and improvements as legal bottlenecks are gradually resolved. This will revive market confidence and create conditions for construction enterprises to recover.

Additionally, at the beginning of the year, the State Bank allocated the entire credit growth target of 15% for 2024, enabling credit institutions to provide sufficient and timely capital to meet the economy's needs.

Meanwhile, interest rates have significantly cooled down. Construction enterprises often use large financial leverage, so when interest rates decrease, the burden of loan interest costs lightens, improving profit margins.

Public investment will continue to be a pillar and a strong driving force for Vietnam's economy in the current period and in the medium and long term.

In recent years, investments in and the development of transport infrastructure have been continuously promoted. The period from 2021-2022 was for starting, preparing, and approving projects, 2023 saw widespread implementation, and 2024 is expected to be a peak year for disbursement and identified as a year of accelerating the execution of key transport projects.

Construction of the access road to Ben Rung Bridge in Hai Phong. The bridge has a total investment of over VND 1,940 billion and is expected to be put into use in May 2024. 

Based on the 2024 budget estimates (approved by the National Assembly), the Prime Minister issued Decision No. 1603/QD-TTg, assigning this year's public investment plan with a total of VND 677,349 billion, striving to achieve a disbursement rate of at least 95%, with transport infrastructure development investment accounting for a dominant portion of VND 422,000 billion.

The impact of public investment will gradually spread to various sectors and fields, first boosting infrastructure contractor enterprises. Therefore, the growth potential for the transport infrastructure construction sector remains large, with significant project execution contracts during this period.

With a large backlog, infrastructure construction enterprises expect to maintain ample work and significant revenue in the coming years.

Additionally, the domestic construction market also hopes to benefit from the wave of FDI flowing into Vietnam.

Despite global economic uncertainties, foreign direct investment in Vietnam in 2023 remained steady at over USD 36.6 billion, up 32.1% year-on-year.

The realized capital of foreign investment projects was estimated at about USD 23.18 billion, up 3.5% compared to 2022, a record disbursement level to date.

The strong FDI inflow into Vietnam in 2023 has created favorable conditions for even more positive prospects in 2024 as Vietnam's geopolitical position and manufacturing hub status are reinforced, and its role in the global FDI flow continues to rise.

The realized foreign direct investment in Vietnam in the first two months of 2024 is estimated at USD 2.8 billion, up 9.8% year-on-year, the highest two-month foreign direct investment level in the past five years, opening up full potential opportunities for industrial construction.

Furthermore, construction enterprises also expect that their internal strength, accumulated, built, and reinforced over time, will be the foundation for positive changes in the near future.

Enterprises believe that with effective financial management, cost review, reduction, and optimization, coupled with established market reputation and brand, successful digital transformation in management and operations, and a team of highly skilled, experienced, disciplined personnel, and diverse business activities, they have a solid foundation for a breakthrough year in 2024.

Source: TTXVN