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“10 billion USD in 2015 to 25 billion USD in 2025”
Vietnam’s hectic scene of modernization and industrialization has benefited some particular industries, one of which is electrical construction. Factories, airports, shopping complexes, everything needs switches and light bulbs.
It has been suggested that electrical construction account for ¼ of general construction’s total market value, which will rise from 10 billion USD in 2015 to 25 billion USD in 2025. Proportionally, electrical construction’s market value should increase from 2.5 billion USD to 6.25 billion USD in the same period.
Such CAGR of 10.9% over the next decade is an impressive piece of statistics, signaling a good time ahead for electrical construction industry.
Naturally, even for the most evenly positive state or situation, there are certain points that require extra attentions.
The first point is infrastructure renovation movement in Vietnam’s rural areas. In around 9,000 communes across the country, a lot of stuff needs to be upgraded, and a lot of other stuff needs to be built: roads and bridges, markets and houses, schools and hospitals.
“FDI trend in Vietnam”
Newly-registered foreign direct investment (FDI) capital in Vietnam has improved since the global financial crisis, racking up nearly $12 billion in 2015 (The World Bank, 2017) and the first half of 2016 alone (Van, 2016).
As one of the driving forces of the economy (Vuong, Tran and Nguyen, 2009), this displays the reforming status of Vietnam.
Specifically, the value of M&A accounts for approximately half the FDI inflows, making it the most crucial component of the capital (Gaskill and Nguyen, 2015; Vuong, Tran and Nguyen, 2009).
Recording over 500 successful deals in 2016, the total M&A deal value reached nearly $6 billion, increasing by 23.8% on-year and more than 10 times since 2006 (MAF, 2016)
“Reach 1 Million in the next 5 years”
By the end of 2015, Vietnam had around 550 thousand active enterprises. That figure is forecasted to reach 1 million in the next five years, half of which will be located in Hanoi and Ho Chi Minh City.
Such rise in number of businesses calls for a corresponding rise in amount of office space, especially when land prices in the 2 major cities are too expensive (up to $7,000/sqm in central districts) for modest-size enterprises to own an independent building.
Currently, Hanoi and Ho Chi Minh City’s total office space stands at 1.2 and 2.4 million sqm respectively. Each city can expect to add around 160,000 sqm to its supply source in 2017. While Ho Chi Minh City will still have the new stock concentrate in downtown area, Hanoi is likely to experience a movement towards west side of the city as its Central Business Districts is quickly running out of usable land.
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