Construction and Building Materials Industry 2026: Entering a New Growth Cycle

By Viet Duong

Public investment and domestic real estate will become the main drivers boosting construction volume, building materials consumption, and the business operations of enterprises in 2026.

Bright Spots from Building Materials

After many enterprises cut production in 2024, construction steel output in 2025 increased by about 6-7%, thanks to demand from infrastructure and civil construction projects. However, the industry's total capacity has not yet been fully exploited, reflecting the cautious sentiment of businesses amid market fluctuations.

Meanwhile, many product categories that faced consumption difficulties in previous years saw improvements. Ceramic tiles reached an output of 550 million m² (up 9% year-on-year) and a consumption of 485 million m² (up 8%). Sanitary ware achieved an output of about 16 million products (up 9%) and a consumption of 15.5 million products (up 11%). Similarly, construction glass reached an output of 158 million m² (up 7.5%) and a consumption of 153 million m² (up 7.5%).

Dr. Thai Duy Sam, Vice President and General Secretary of the Vietnam Association for Building Materials, stated that since the beginning of Q4/2025, nationwide construction projects have actively accelerated their completion schedules to boost capital disbursement. This has made the building materials market more vibrant, with consumption surging and prices rising slightly, signaling a strong growth cycle for 2026.

According to the Construction and Building Materials Industry Report by MB Securities (MBS), 2026 is considered a "pivotal year" for the 2026-2030 mid-term public investment cycle, while real estate supply is expected to remain high. Growth drivers come not only from public investment but also from civil construction. In the social housing segment alone, supply is forecast to surge by roughly 45% in 2025 and 50% in 2026, opening significant room for construction enterprises and those supplying materials and services.

Actual observations show that one of the most notable developments in the building materials market in early 2026 is the continued upward adjustment of construction steel prices, marking the second consecutive increase within a short period. According to announcements from steel manufacturers like Hoa Phat and Viet Duc, the primary causes are market fluctuations and high input material costs.

Meanwhile, several cement companies, including VICEM Ha Tien, SCG Vietnam, INSEE Vietnam, Fico YTL, and VICEM Ha Long, simultaneously announced price increases in January 2026, with a common increase of around 100,000 VND/ton. These companies cited high energy and raw material costs, making price adjustments necessary to ensure stable production operations.

Mr. Dinh Hong Ky, Chairman of the Ho Chi Minh City Association of Construction and Building Materials (SACA), noted that accelerated public investment often drives massive demand for heavy materials (such as stone, sand, concrete, asphalt, and steel). This impact on material consumption becomes more pronounced when projects transition from approval and bidding to mass construction. Furthermore, real estate construction resuming in certain segments and regions helps improve the demand for finishing materials.

The Overall Picture of the Construction Industry

From another perspective, the positive outlook of the building materials sector partly reflects the optimistic prospects of the construction industry in 2026.

According to estimates from the Ministry of Finance, the total capital allocated for public investment in 2026 is expected to reach about 1.08 quadrillion VND, a 12% increase year-on-year.

Enterprises such as Vinaconex, Licogi, Deo Ca, Coteccons, Cienco 4, Hoa Binh, and Fecon are well-positioned to benefit from this trend. Many key national projects, such as the expansion of the Ho Chi Minh City - Long Thanh and Bien Hoa - Vung Tau expressways, as well as the Long Thanh airport, are expected to be completed in the first half of 2026, thereby boosting the backlog (signed but incomplete contracts) of construction companies during this period.

Statistics from MBS forecast that the backlog of listed construction companies is expected to grow by 24% year-on-year in 2026, primarily driven by large enterprises. A stable workload from aggressively implemented projects could positively impact contractors' winning bid prices. MBS assesses that winning bid prices could improve compared to the 2023-2024 period as better selling prices give developers more room to raise construction capital costs.

Overall, with a large volume of pending contracts and a strong recovery trend in real estate and public investment, the civil construction group remains a hopeful bright spot in the new growth cycle. However, differences in financial capacity, debt structure, and management efficiency will result in uneven benefits among enterprises—a factor investors need to carefully consider during the industry's recovery phase.

Although persistently high raw material prices may limit gross profit margin expansion, these higher material costs are offset by favorable winning bid prices, allowing gross profit margins to remain flat at around 3% - 3.5%, according to MBS forecasts.

In addition, current borrowing interest rates, despite a slight increase of about 0.5% - 1.0% compared to early 2024, remain at 11.5%—approximately 1% lower year-on-year—thereby easing the interest burden on developers. Furthermore, the high demand for real estate purchases, reflected by absorption rates exceeding 70% at newly launched projects, can generate cash flow for businesses.

In the Vietnam Report's assessment of the Construction/Building Materials industry, an optimistic survey revealed that 47.2% of VNR500 enterprises believe the sector will experience strong growth next year. This optimism stems from the new public investment cycle and policies unlocking infrastructure resources—especially in transportation, energy, urban development, and social housing.

Nevertheless, behind the promising picture and booming workload, construction enterprises still struggle with concerns over human resources, capital, and outdated unit prices and norms.

Mr. Nguyen Quoc Hiep, Chairman of the Vietnam Association of Construction Contractors, observed that the industry's biggest concern right now is the shortage of human resources, from engineers to unskilled workers. Additionally, labor unit prices and norms in public investment projects have not kept pace with the market, forcing contractors to heavily subsidize costs.

Moreover, construction companies face capital challenges. The representative of the Construction Contractors Association stated that up to 95% of construction enterprises have a capital scale of under 100 billion VND, making it difficult to access credit to prepare materials for large projects. This is also a critical factor that investors must pay special attention to during the construction industry's upcoming recovery period.