VIETNAM

QUARTERLY CONSTRUCTION COST
3 Quarter - 2009

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... 5.............. 3 APPROXIMATE BUILDING COST .... 9 GOVERNMENT'S SUBSIDIZED MATERIALS .................... 6...................... AVERAGE MATERIAL COST TREND IN VIETNAM .................................. 5 AVERAGE DAILY LABOUR COST IN PRIVATE SECTOR CONSTRUCTION PROJECT IN VIETNAM ............TABLE OF CONTENTS 1.................................................. 10 ................................................... 7 STATUS OF VIETNAM PRICE MOVEMENTS ............ 3................ 2......................................................... OVERVIEW........................................................... 6 4...................................................................................

most notably in commercial development. Vietnam’s economy over the past 10 months of 2009 has generally fared better than most both in terms of GDP growth (forecast in 2009 as +3%) and also with regard to its fiscal management. During 2008 Vietnam was experiencing Consumer Price Inflation (CPI) of over 25%. Fears of further VND devaluation have temporarily subsided however the Vietnam trade deficit is widening and this will invariably put pressure on the government to consider devaluation. 2009) is a maxim well practised within the modern economic environment. The Vietnam government has recently announced that it will continue to maintain interest rates subsidies through fiscal Davis Langdon & Seah Vietnam Copyright Page | 3 . Previously this paper had expressed concerns with regard to the risk of global trade protection and the clear impact this would have had especially upon developing countries and export led developed countries such as those within South East Asia. Such macro factors (combined with external factors such as commodity hikes and global credit uncertainty) invariably led to major construction inflation during 2008 and ultimately the cooling off of prices during late 2008 and early 2009. it would seem that the nation states are not reverting back to the ideologies of command economics and import substitution. state intervention is again giving way to free markets to manage both crisis and growth. Vietnam initiated its own fiscal stimulus package in 2009 (over USD$ 1 Billion) and a large portion of this package comprised an interest rate subsidy that has actually stimulated the private sector. Foreign Direct Investment (FDI) has dropped 70% when compared with 2008 – this is no worse or better than global statistics on FDI however commodity export led countries such as Vietnam do remain particularly vulnerable to such investment drops. In essence the continued development of free trade (possibly bilateral rather than multilateral) will continue to provide a powerful booster to global economic growth in 2010 and beyond. 1920 d.OVERVIEW Notwithstanding the events of the last twelve months. It would seem the maxim “to be ideological is to preconceive reality” (Irving Kristol b. The Western economies conscious of their large fiscal deficits are beginning to again to talk of small government and privatisation. Commercial Bank Lending of over 20% and significant Vietnam Dong devaluations. in essence. We are now beginning to observe the displacement of ideology by economic reality. The Vietnam economy during 2009 has not had an easy ride. Notwithstanding the WTO Doha deadlock of 2008 and the clear depreciation of global foreign direct investment we are not witnessing waves of trade tariff hikes.

in general this is attributed to an increase in new tenders for projects notably in South Vietnam. We suspect FDI to remain sluggish in 2010 however certain micro reforms in some government sectors may allow for the opening up of areas such as the telecommunication market and retail this could help attract much needed FDI. Steel and oil prices will continue to remain volatile and the current global price rises of these commodities is as much to do with restocking rather than production demand. The increase in costs however is not pronounced as contractors continue to fill their order books. In conclusion we see construction prices moving slightly upwards during the remainder of 2009. Also expect steel prices to increase in line with relative iron ore appreciation globally. During the final quarter of 2009 expect further drops in the cement price arising from over supply. Davis Langdon & Seah Vietnam Copyright Page | 4 . In 2010 we suspect a higher level of ODA disbursement into infrastructure and continued interest rebates which will fuel the local private development sector. Labour prices are generally rising in line with CPI however as yet they do not represent a significant price sensitive item within the construction cost equation. Material prices have generally remained static except for oil which has followed the trend in global price dynamics.OVERVIEW measures further into 2010 and accordingly this is like to lever further pressure on a VND devaluation. Although FDI has dropped the market has remained stable due to Local Private Investment which has increased as a function of interest rate subsidies as derived through the government fiscal stimulus programme.09 have increased around 1% since the last quarter. Construction prices during Q3. notwithstanding. Construction output had dropped significantly in 2008 and we are not expecting any notable increase in 2009. the fact that output has stabilised must be seen as positive. it would seem that price drops are already being experienced within the Ready Mixed Concrete market.

CONSTRUCTION FLOOR AREA RESIDENTIAL Detached Houses and Bungalows Average Standard Apartment.295 – 1. The costs for the respective categories given above are averages based on fixed price competitive tenders. uniform. with normal soil and site condition.205 1.200 Q4 06 750 800 1. air-conditioning and electrical distribution system to tenant areas. 2. land cost. but excludes hotel operated equipment costs (e. The cost excludes site formation works. 4. Shopping centres and average standard offices exclude finishes.550 Q4 08 1. professional fees. 3. A/C ducting and light fittings to tenant areas. All buildings are assumed to be built on flat ground.650 Q3 09 1. F. balconies.515 1. includes interior decoration and loose furniture etc.F. The standard for each category of building vary from country to country and do not necessarily follow those of Vietnam. etc.458 1.) OTHER Basement Car Parks (< 3 levels) Elevated Car Parks (< 4 levels) Primary and Secondary schools Student Hostels Sport Club inclusive of F. The costs per square metre are based on Constructions Floor Areas measured to the outside face of the external walls/external perimeter including lift shafts. It must be understood that the actual cost of a building will depend upon the design and many other factors and may vary from the figure shown.F. HOTEL Resort Hotel 03 Star Budget Hotel inclusive of F.395 1.&E Q4 05 750 800 1.145 1.155 1. 3. Apartments and Houses include air conditioning. 3. Flatted factories and industrial –office buildings exclude manufacturing equipment. plant rooms. High rise Terraced Houses Q4 05 280 450 600 160 Q4 06 280 460 650 180 Q4 07 440 575 675 360 Q4 08 495 615 785 403 Q1 09 473 590 753 388 Q2 09 470 585 745 385 Q3 09 430 – 520 540 – 650 700 – 815 365 – 410 Specification 1. linen. external works. 2.075 1.295 1.385 1. exhausted hood but exclude loose furniture and home appliances OFFICE /COMMERCIAL Prestige Offices.780 Specification 1. Average Luxury Apartment to be 30-50 storey 100-150 m2 per flat. High Rise Shopping Centers Q4 05 670 500 380 Q4 06 670 500 380 Q4 07 800 650 600 Q4 08 898 728 673 Q1 09 860 698 645 Q2 09 850 695 640 Q3 09 755 – 970 650 – 755 595 – 700 Specification 1. A/C ducting and light fittings to tenant areas. 2. INDUSTRIAL Light Duty Flatted Factories Heavy Duty Flatted Factories & Warehouses Single Storey Conventional Factories Owner Operated Factories. cutlery.&E 05 Star Budget Hotel inclusive of F. High Rise Average Standard Office. water tanks and the like. Low Rise Q4 05 250 300 260 N/A Q4 06 250 300 260 N/A Q4 07 280 320 280 N/A Q4 08 280 373 373 360 Q1 09 255 373 373 360 Q2 09 255 370 370 360 Q3 09 195 – 325 320 – 425 320 – 425 320 – 410 Specification 1. Davis Langdon & Seah Vietnam Copyright Page | 5 .565 – 1. kitchen cabinets. Offices based on buildings 20-30 storeys high with floor plans minimum 1000m2per level.F.g. finance and legal expenses.663 Q2 09 1. crockery. Underground car park cost including temporary steel works and bottom-up Note 1. suspended ceiling.025 – 1.&E. Prestige offices are fitted with raised floor. special services provisions.300 1. kitchen cooktop. Average Standard Apartments to be 30-50 storey 60-90 m2 per flat.738 Q1 09 1.APPROXIMATE BUILDING COST IN VIETNAM – Q3 2009 US$ PSM. High rise Luxury Apartments.F. stairwells.200 Q4 07 1.&E Q4 05 275 N/A 350 N/A 450 Q4 06 375 N/A 350 N/A 500 Q4 07 515 300 380 400 600 Q4 08 585 355 438 505 728 Q1 09 553 335 420 483 698 Q2 09 550 335 415 480 695 Q3 09 520 – 600 285 – 390 410 – 430 430 – 540 650 – 745 Specification 1.

86 10 10.7 Sep-09 8.92 10.86 14. Electrician) Brick layer Metal Worker Construction Plant Mechanic Apr-09 8.42 Jun-09 8.37 11.24 14.64 9.71 9.09 14.28 11.23 20.17 14.91 10.23 11.49 20.97 10.34 11.34 20.37 14.78 10.64 Aug-09 8.28 14.06 10.54 9.09 11.24 11.49 11.03 11.AVERAGE DAILY LABOUR COST IN PRIVATE SECTOR CONSTRUCTION PROJECT IN VIETNAM – Q3 2009 AVERAGE DAILY COST (USD) Description General Worker Concretor Bar Bender and Fixer Carpenter (formwork) Plumber Electrical Fitter (incl.97 14.27 20.03 14.79 9.74 9.43 11.86 10.69 9.34 May-09 8.39 11.06 14.82 10.58 9.43 20.17 11.82 12 11 10 9 8 1-Apr 1-May 1-Jun General Worker 1-Jul 1-Aug 1-Sep Brick layer General Worker Bar Bender and Fixer Source: DLS Database Davis Langdon & Seah Vietnam Copyright Page | 6 .92 14.27 11.54 Jul-09 8.39 20.83 9.82 14.72 10 14.

40 8.99 55.66 0.18 8.74 47.72 46.66 6.75 0.02 54.63 0.AVERAGE MATERIAL COST TREND IN VIETNAM – Q3 2009 AVERAGE PRICE (USD) No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Description Portland Cement (PCB40) Mild steel round bars (6-20mm) High tensile steel bars (10-40mm) 40mm aggregate 20mm aggregate Yellow sand Clay brick units (210x100x60) Concrete blocks (190x190x390) Structural Steel Clear Float Glass 6mm Laminated Glass 10mm Tempered Glass 10mm RMC M20 Grade RMC M35 Grade RMC M40 Grade Diesel Petrol (Mogas 92) Hardwood Plywood Local Homogeneous floor tiles Emulsion paint Bags Kg Kg Cum Cum Cum Pcs Pcs MT M2 M2 M2 Cum Cum Cum Lit Lit m3 m2 m2 Lit Apr-09 3.78 10.18 0.39 6.36 4.38 47.49 704.85 0.32 0.56 0.35 4.68 0.68 0.71 24.50 705.50 706.28 8.95 10.67 0.63 6.96 10.53 8.64 10.60 0.15 8.58 6.38 26.11 10.95 6.18 0.06 56.34 4.49 705. Import tax) Davis Langdon & Seah Vietnam Copyright Page | 7 .89 10.54 8.12 0.15 58.01 57.65 0.02 10.73 0.13 10.09 Jul-09 3.94 10.70 0.50 722.71 9.70 26.17 8.18 0.20 0.12 0.16 8.18 0. wastage and other incidentals (and is ex-works price) Tax (VAT.49 53.60 0.58 6.70 477.56 0.64 0.37 0.09 May-09 3.06 57.36 4.13 10.03 22.31 0.36 4.67 506.08 Excluded : 1.71 48.16 8.18 0.74 22.28 8.16 55.04 55.37 0.70 58.87 7.68 0.76 0.50 722.89 10.74 45.35 4.49 24.93 8. Labour. plant.39 10.09 Jun-09 3.37 0.66 0.58 26.18 0.12 56.36 46.86 24.60 8.86 26.48 24.66 0.80 499.83 516.08 Aug-09 3.72 0. transport.88 527.61 6.37 0.75 22.59 0. 2.49 24.66 6.08 Sep-09 3.71 9.76 477.92 7.68 55.

Steel Bars 1.6 USD /CUM USD /PCS 0.4 0.2 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 80 70 60 50 40 30 20 10 0 2008 Clay brick units 2009 Concrete blocks Davis Langdon & Seah Vietnam Copyright Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2008 RMC M20 Grade RMC M35 Grade 2009 RMC M40 Grade Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2008 Portland Cement (PCB40) 2009 Ready Mixed Concrete Page | 8 .5 2008 Mild steel round bars (6-20mm) 2009 High tensile steel bars (10-40mm) Clay Brick + Concrete 0.5 5 4 USD /BAG USD /KG 1 3 2 1 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 0 Portland Cement (PCB40) 0.8 0.

STATUS OF VIETNAM PRICE MOVEMENTS PRICE INDEX: CONSUMER PRICE INDEX for whole country and major cities of Hanoi and Ho Chi Minh CONSUMER PRICE INDEX 160% 150% 140% 130% 120% 110% 100% 2005 J-07 F-07 M-07 A-07 M-07 J-07 J-07 A-07 S-07 O-07 N-07 D-07 J-08 F-08 M-08 A-08 M-08 J-08 J-08 A-08 S-08 O-08 N-08 D-08 J-09 F-09 M-09 A-09 M-09 J-09 J-09 A-09 S-09 CPI in Hanoi CPI in HCMC 100 109 114 111 112 113 114 115 116 116 117 119 124 128 134 135 137 145 147 148 151 149 148 146 144 146 149 147 148 149 151 152 151 153 100 110 115 109 112 114 115 115 115 116 117 119 126 126 134 135 138 147 147 146 151 148 147 145 142 146 150 148 149 150 150 153 151 154 CPI in whole country 100 109 111 111 111 112 113 114 115 116 116 118 121 124 129 133 135 141 144 145 148 148 148 147 146 146 148 148 148 149 149 150 151 152 AVE PRICE INDEX HOUSING AND CONSTRUCTION MATERIALS for the whole country and major cities of Hanoi and Ho Chi Minh HOUSING & CONSTRUCTION MATERIALS 160% 150% 140% 130% 120% 110% 100% 2005 J-07 F-07 M-07 A-07 M-07 J-07 J-07 A-07 S-07 O-07 N-07 D-07 J-08 F-08 M-08 A-08 M-08 J-08 J-08 A-08 S-08 O-08 N-08 D-08 J-09 F-09 M-09 A-09 M-09 J-09 J-09 A-09 S-09 In Hanoi In HCMC 100 109 114 109 111 113 114 117 116 116 118 120 128 127 130 133 136 142 149 148 150 148 147 145 142 146 151 147 147 149 153 154 153 153 100 107 112 110 113 113 116 115 113 117 118 121 126 128 130 137 137 142 148 146 151 146 145 145 144 147 150 149 149 151 152 153 152 153 In Whole country 100 111 113 113 114 115 117 118 118 119 120 123 127 130 132 137 140 142 145 147 150 150 148 143 137 138 141 141 142 143 145 148 149 151 Source: GSO (Vietnam) Davis Langdon & Seah Vietnam Copyright Page | 9 .

15 1.55 0.05 1.70 0.65 0.20 1.GOVERNMENT’S SUBSIDIZED MATERIALS DIESEL PRICE in Vietnam market against the world price market DIESEL PRICE 2007 .90 0.45 0.80 0.85 0.05 1.45 0.60 0.2009 USD/Liter 1.15 1.10 1.60 0.10 1.20 1.95 0.80 0.90 0.25 1.65 0.75 0.55 0.85 0.2009 USD/Liter 1.40 Month World market VN market Source: Petrolimex (Vietnam) Davis Langdon & Seah Vietnam Copyright Page | 10 .70 0.50 0.00 0.95 0.40 Month World market VN market GASOLINE PRICE in Vietnam market against the world price market GASOLINE PRICE 2007 .25 1.50 0.00 0.75 0.

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