Positive signs for the construction business.

Reduce difficulties

Representatives from many construction companies shared that when real estate project developers face difficulties, the business operations of civil construction contractors are immediately affected. However, by changing business strategies such as shifting towards public investment projects and industrial construction, the difficulties in business results have been mitigated.

A project constructed by Coteccons Construction Joint Stock Company. Photo: Tran Dung

According to a representative from Coteccons Construction Joint Stock Company, in the first quarter of the 2024-2025 fiscal year (July 1, 2024 - September 30, 2025), revenue reached VND 4,759 billion, an increase of 15.4%, and after-tax profit reached VND 93 billion, an increase of nearly 40% compared to the same period last year. The gross profit margin improved from 2.4% in the same period last year to 4.3% this quarter. Business management expenses increased by 42%, mainly due to increased employee costs, while the provision for doubtful receivables began to be reversed this quarter.

Although no longer required to make provisions in the first quarter, as of the end of September, Coteccons still had to make provisions for bad debts of VND 1,429 billion. Several companies have high levels of bad debt with Coteccons, such as Viet Star Real Estate Investment Co., Ltd. - a subsidiary of Tan Hoang Minh, Saigon Glory Co., Ltd., Minh Viet Investment Joint Stock Company, etc. Among them, the VND 143 billion bad debt of Saigon Glory only appeared in the last quarter's report of last year and required a 100% provision. The bad debt with Tan Hoang Minh stems from projects handed over before 2020.

From the beginning of the 2025 fiscal year to the present, Coteccons and Unicons have won bids for numerous large-scale projects in the civil, industrial, and infrastructure sectors, with a total value of up to VND 10,300 billion, creating a solid foundation to achieve their production and business goals for the next phase. Notably, the repeat sales rate/total number of awarded projects reached 69% with a series of projects from Sun Group ; Ecopark Group; BWID project; VinFast…

It is evident that Coteccons has made a significant shift in its business strategy, particularly in expanding its revenue structure into the industrial construction sector. This shift is yielding many positive results, especially in the context of a slow recovery in the residential real estate market. Its international client base and partners, considered to have superior financial standing compared to current domestic project owners, provide a steady stream of revenue and a low risk of bad debt.

Another construction company, Hoa Binh Construction Group, despite a sluggish quarter with net revenue down 48% compared to the same period last year to 975 billion VND, had a gross profit of 60 billion VND after deducting the cost of goods sold. The regular credit extension by BIDV, with a maximum limit of 4,000 billion VND, is also a significant driving force helping Hoa Binh Group expand its business operations.

With the addition of senior personnel with international experience, representatives of Hoa Binh Group stated that they are gradually realizing their vision of becoming one of the leading construction groups in the region. The contractor is undergoing a comprehensive restructuring, streamlining its personnel system, optimizing management costs, and restructuring assets through the divestment of underperforming subsidiaries and affiliated companies.

The recovery process will gradually become more apparent.

Industry experts predict that the construction market will maintain a stable growth rate by the end of 2024, but will experience a certain slowdown due to factors such as capital constraints, fluctuating material prices, and credit policies.

However, the trend towards green and sustainable building development and the application of technology will create significant opportunities. Policies supporting social housing, urban infrastructure development, and the redevelopment of old urban areas will also be driving forces for the development of the civil construction market in the near future.

Regarding urban infrastructure development, the North-South high-speed railway project promises to have a positive impact on economic development. With a total estimated investment of approximately US$67.34 billion, the project will expand development space, creating a foundation and impetus for the development of many industries such as construction, materials, etc.

According to Nguyen Quoc Hiep, Chairman of the Vietnam Association of Construction Contractors, the North-South high-speed railway project accounts for over 33 billion USD in construction costs. Vietnam has never undertaken a project of such large scale and capital before. Therefore, this could be a transformative opportunity for construction contractors.

If we consider high-speed rail systems to still rely on tunnels and cable-stayed bridges, Vietnamese contractors have made remarkable progress and are capable of undertaking all of these projects. However, frankly speaking, with the North-South high-speed rail project aiming for 350 km/h, the precision related to speed demands a different level of technology, and therefore, complacency is unacceptable. Vietnamese contractors need to be aware that this is a new technological battleground requiring them to learn and absorb the most advanced construction knowledge to apply.

"With the current capabilities and expertise of Vietnamese businesses, they are fully capable of handling the technology and construction aspects. The current concern is the labor force. Existing projects, including expressways, are facing a severe labor shortage, especially for direct construction workers. Therefore, it is necessary to plan for a sufficient workforce to carry out the construction," said Mr. Nguyen Quoc Hiep.

Regarding the market, as real estate develops strongly, the demand for construction materials will increase. With gradually positive developments, it can be confidently asserted that the real estate market has passed the bottom of the U-shaped curve and is experiencing renewed growth, along with increasing interest from investors and customers... This creates a changing market landscape, but in reality, the market still harbors many challenges.

Real estate investors (primarily real estate development companies) decide on construction projects based on the needs and potential of the real estate market. When the real estate market shows profit potential, investors will pour money into building projects such as apartments, villas, urban areas, industrial parks, office buildings for rent, etc.

According to Dr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, the recovery process of the real estate market will become clearer from now until the end of 2024, but it will not be able to "break through" yet due to differentiation across segments and regions. However, when investors gain more confidence, it will boost the flow of money into real estate.

According to CBRE Vietnam, 2025 marks the beginning of a new real estate cycle, with the market continuing its recovery trend but at a similar pace to 2024. The North will become the core of this new cycle, with continued high supply of 25,000-30,000 units; Ho Chi Minh City will have a more modest supply of 7,000-8,000 units. Prices will maintain their upward trend because the main issue in the market is supply, while in the short term, the relief from supply pressure has not yet been significantly achieved. Regarding market absorption, demand remains strong.

 

Funding for civil construction projects, especially in the housing segment, will continue to face many difficulties. Although the government has supportive policies, access to credit remains a key factor impacting the market. Banks may maintain high interest rates to control credit risk, making it difficult for businesses and homebuyers.

Mr. Dao Duc Thanh, Deputy Director of Hoa Thanh Building Investment and Construction Co., Ltd.

Source: https://kinhtedothi.vn/tin-hieu-khoi-sac-cho-doanh-nghiep-xay-dung.html