Two things happened to the Vietnam construction market in 2026. The sector continued its structural growth trajectory. And the legal environment governing how international contractors operate was fundamentally rewritten.
The new Law on Construction took effect on July 1, 2026. Together with Decree 210/2026/ND-CP, it has shifted Vietnam’s contracting framework toward international project standards. For British engineering and construction groups, a USD 139 billion public investment pipeline and a modernised legal framework have materially reduced the barriers to entry.
Vietnam Construction Market: Size, Industry Analysis, and Key Growth Factors
Vietnam’s construction sector is one of the fastest-growing in Southeast Asia by absolute value. The market was valued at approximately 72 billion dollars in 2024. It rose to USD 80.61 billion in 2026 and is on track for continued increase.
Real output in the construction industry grew 8 per cent in 2025. The growth rate reached 7.1 per cent in 2026. Both figures outperform the construction sector in Indonesia and Thailand.
Construction Volume and Sector Forecast to 2031
The base-case forecast puts the total market at USD 115.78 billion by 2031. That represents a compound annual growth rate of 7.51 per cent. The volume of construction activity across Vietnam is set to rise across all major segments over this period.
The construction sector is driven primarily by government-backed infrastructure spend. The public investment programme for the current government term is VND 3.4 quadrillion, approximately 139 billion dollars. This is 55 per cent more than the previous term.
For British engineering groups, this composition matters more than the headline number. The project pipeline is visible, bankable, and tendered in advance. That differs from markets driven by speculative real estate development.
Residential Construction, Housing Demand, and the Real Estate Sector
Residential construction has rebounded sharply since the 2024 land law reforms. Housing demand across urban areas has increased significantly. The government’s social housing programme, mandated under the Housing Law 2023, continues to generate a large number of new projects.
The real estate sector is a key growth area within Vietnam’s construction industry. Commercial estate, particularly grade-A office space and industrial parks, continues to absorb FDI inflows. Green building standards now apply to a growing share of new estate development.
Demand and Growth: Key Drivers for Construction Vietnam’s Sector
Several demand drivers are accelerating growth across Vietnam’s construction sector. The rise of manufacturing FDI has increased the number of industrial projects across northern and central provinces. Total construction area under development continues to expand at a significant rate.
Renewable energy is an emerging segment within the construction sector. Power infrastructure projects, including wind farms, solar arrays, and grid upgrades, now form a material share of the project pipeline. Production of new construction capacity is increasing year on year.
Construction sector Vietnam analysts forecast continued sector expansion through 2031. The rise in public investment is the primary driver. A secondary rise in private commercial construction tracks inbound FDI.
Major Legal Changes in the Vietnam Construction Industry
The Law on Construction enacted in December 2025 is the most significant revision to Vietnam’s construction regulatory framework in over a decade. Its core objective is to reduce administrative burden and align contracting practices with international standards.
Three changes are immediately operational for international contractors.
State appraisal of construction drawings after the basic design phase has been abolished. The project investor now appraises and approves the detailed construction design. This removes a process step that routinely added four to six months to project timelines.
The law confirms that bilingual contracts can designate the non-Vietnamese version as the controlling text in contracts that include an international party. For British groups, this resolves a key source of legal uncertainty in EPC and PPP negotiations.
The law also introduces FIDIC-aligned contracting principles as the reference framework for public investment and PPP contracts. These include provisions on dispute adjudication boards, force majeure, and variation orders. This is the single most commercially significant change for British engineering firms.
Decree 210/2026/ND-CP: Material Cost, Payment Discipline, and Contract Provisions
Decree 210/2026/ND-CP provides the operational detail beneath the new Law on Construction. It includes key provisions on payment security, contract administration, and cost management. All provisions apply from July 2026.
On payment: contractors in public investment projects now have a statutory right to suspend performance if the investor fails to pay within the prescribed period. This right did not exist in Vietnamese construction law before the Decree.
On material cost and procurement: the Decree includes formalised price adjustment mechanisms for exchange rate movements. These apply in contracts where overseas currency payment is permitted. They directly affect British firms importing specialist equipment or engineered materials.
The Decree also mandates stricter notice timelines, variation order procedures, and performance security requirements. Together, these include a level of contract discipline comparable to an internationally managed construction project. Contractors must include compliance documentation at each payment phase.
Construction Operation Licence: How to Construct and Build in Vietnam’s Building Sector
International construction companies cannot begin work in Vietnam on a company registration alone. The Construction Operation Licence is a per-contract, per-project authorisation. It is issued by the Ministry of Construction or a relevant provincial authority.
The licence cannot be obtained in advance of project award. The contractor must first win a bid, then apply for the licence specific to that contract. The application must include confirmation of scope, contract duration, and a commitment to comply with Vietnamese construction law.
International contractors must also partner with a licensed Vietnamese construction company or engage local subcontractors. In practice, most groups identify their local partner before the tender is submitted. This is the standard approach across Vietnam’s building sector for international entrants.
Key British and International Business Groups Active in Vietnam’s Construction Sector
British and international business groups have been active in Vietnam’s construction sector for over two decades. Their track record provides competitive peer evidence for new entrants. It demonstrates that complex, high-value projects can be delivered within Vietnam’s construction environment.
Atkins and Arup collaborated on Vincom Landmark 81 in Ho Chi Minh City, an 81-storey mixed-use tower and the tallest building in Southeast Asia on completion. Mott MacDonald has provided infrastructure advisory services across Vietnam’s transport and water sectors from a sustained local presence. Scott Wilson, now part of WSP, built a significant presence in Vietnamese infrastructure planning during the 2010s.
Vietnamese Construction JSC Groups: Local Partner Identification for Country Entry
Vietnam’s construction sector includes a number of large domestic groups that international firms typically engage as local partners. Vinaconex JSC is one of Vietnam’s largest state-linked construction JSC groups, with broad civil engineering and residential construction capacity. Coteccons Group JSC and Hoa Binh Construction Group JSC are leading private-sector construction JSC companies with significant project delivery track records.
Identifying the right construction JSC partner is a key step in country entry. The local group provides licensing capacity, labour force management, and supply chain relationships. The international group contributes technical expertise, project methodology, and specialist materials and equipment.
Competitive Analysis: Construction Industry Vietnam for British Business
No British group has entered an empty market. South Korean, Japanese, and Singaporean construction business groups have longer histories in Vietnam. They have established relationships with Vietnamese government bodies and construction JSC partners.
What the new legal framework changes is the competitive environment for British business. The FIDIC-aligned contract framework, bilingual contracts, and payment discipline provisions reduce the country entry risk that previously made the construction industry Vietnam harder to access. The UK-Vietnam Comprehensive Strategic Partnership, signed October 2025, adds institutional support for British business groups entering this market.
Infrastructure Project Pipeline: Total Investment, Area Development, and Demand Forecast
Vietnam’s public investment programme allocates VND 3.4 quadrillion, approximately 139 billion dollars, to infrastructure construction. The 2026 social investment target of 40 per cent of GDP is historically unprecedented in Vietnam. For international construction groups, the demand from this pipeline is real, budgeted, and in many cases already being tendered.
The total construction project pipeline spans transport, energy, urban development, and water. It includes a significant number of large-scale programmes that individually exceed the total construction output of many smaller markets. This project pipeline is the primary driver of international construction business interest in Vietnam.
North-South High-Speed Railway: Vietnam’s Largest-Ever Construction Programme
The North-South High-Speed Railway is Vietnam’s largest construction programme: USD 67 billion, 1,541 kilometres, connecting Hanoi and Ho Chi Minh City. Ground-breaking is targeted for the end of 2026. The project will require civil engineering, tunnelling, viaduct construction, systems integration, and rolling stock procurement across a 15-year delivery horizon.
Decree 210’s FIDIC-aligned contract framework was partly designed to support the international tendering this programme requires. Transaction volumes on the HSR programme will be large and sustained across the delivery period. British groups with EPC and civil engineering capability are well-positioned to compete for a share of this project.
Project Vietnam planners include the HSR as the centrepiece of a broader transport modernisation strategy. Supporting projects include the Lao Cai–Hanoi–Hai Phong railway and the Can Gio International Transshipment Port. Each of these project programmes generates demand for construction management, procurement, and engineering advisory services.
Industrial Projects, Green Building, and Urban Area Construction Demand
Urban area development in Ho Chi Minh City targets a total mobilisation of 25 billion dollars. Hanoi’s 100-year master plan includes 18 metro lines spanning 979 kilometres. Industrial project construction is accelerating across Vietnam‘s northern and central provinces as manufacturing FDI continues to rise.
Green building demand is increasing as ESG requirements filter through to multinational tenants. Power infrastructure, including solar, wind, and grid construction, forms an increasing share of total construction sector output. Renewable energy construction now represents a significant construction volume in its own right.
Market Entry Routes: What Each Structure Includes for British Groups
British construction and engineering groups entering Vietnam have four principal operating structures. Each includes a different cost, risk, and transaction profile.
A construction joint venture with a licensed Vietnamese contractor is the most common structure. The British group contributes technical expertise and project management methodology. The Vietnamese partner provides licensing capacity, labour force management, and supply chain access.
An engineering consultancy registered as a foreign-invested enterprise allows British firms to offer project management, design, and supervision services. This avoids construction execution risk. It is the model used by Mott MacDonald-style advisory mandates in Vietnam.
Acting as a specialist subcontractor allows British groups to deliver a technically differentiated scope, tunnelling, structural steel, MEP systems, without taking on overall delivery obligations. This route includes a lower country risk profile and does not require a Construction Operation Licence in the same way as a main contractor.
For larger groups, direct EPC contract pursuit is now more viable. Decree 210’s FIDIC alignment and formal cost and transaction provisions make large-contract cash flow management more predictable. The UK-Vietnam CSP creates a facilitating environment, stronger institutional support from the British Embassy’s commercial team in Hanoi and a bilateral trade relationship growing at 18 per cent annually.
Contact Viettonkin for further consulting on Vietnam construction market entry, Construction Operation Licence applications, Decree 210 contract compliance, Vietnamese construction JSC partner identification, and infrastructure project advisory across Vietnam’s public investment pipeline.
