Awaiting a revolution in rail and property for Vietnam

Vu Viet Linh, Vice president of Institutional Research, Maybank Investment Bank

The growth goals are underpinned by a series of transformative infrastructure projects designed to reshape the economic geography. At the heart of this vision lies the $67 billion north–south high-speed rail (HSR) project, a landmark initiative that could well become Vietnam’s most consequential infrastructure development of the coming decade.

The north–south HSR line is designed to connect Hanoi and Ho Chi Minh City through 23 stations, creating a national transport backbone that integrates both express and sectional services.

This design is intended to channel economic activity into secondary hubs such as Vinh, Danang, and Nha Trang, thereby redistributing growth beyond the two dominant metropolitan centres.

With nearly half of Vietnam’s population and GDP concentrated along the Hanoi–Ho Chi Minh corridor, the density profile strongly supports the viability of such a national HSR system. Comparative analysis indicates Vietnam’s entry point into HSR mirrors the early-adoption strategies of China and India, where rail expansion catalysed strong urban growth and regional development.

The economic benefits of the project are multipronged. In the short term, construction will generate strong demand for raw materials, with estimated consumption of five million tonnes of steel and 29 million tonnes of cement – equivalent to 21 per cent and 38 per cent of Vietnam’s domestic steel and cement consumption in 2025, respectively.

Over the medium term, the venture is expected to transform secondary provinces into new growth centres, balancing demographic momentum and housing demand. Historical precedents from China, South Korea, and Japan show that HSR corridors often trigger strong property development in previously overlooked regions, redistributing wealth.

For Vietnam, this redistribution could prove critical in easing pressure on Hanoi and Ho Chi Minh City, where property prices have surged in recent years.

Equally important is the sustainability dimension. HSR is among the most environmentally efficient modes of transport, producing minimal emissions compared to cars and planes. Given Vietnam’s high carbon intensity, the project represents a crucial step towards greener public transport and long-term climate resilience. By embedding sustainability into its infrastructure strategy, Vietnam aligns itself with global climate goals while addressing domestic challenges of pollution and congestion.

The success of the undertaking, however, will hinge on several critical factors. Firstly, adequate public financing is essential to prevent delays caused by funding stress – a challenge that has plagued similar projects in Taiwan and Indonesia. In this regard, we see Vietnam’s fiscal health provides a solid foundation, provided that execution is carried out with discipline and determination.

Equally important is the strengthening of mid-route economies. To prevent growth siphoning towards terminal cities, hubs such as Nghe An, Danang, and Khanh Hoa must reinforce their industrial and service bases, ensuring that the benefits of connectivity are widely distributed.

Another vital factor is the integration of HSR with transit-oriented development, which is often referred to as rail–property synergy. In fact, this model has been successfully implemented in several countries, proving real estate revenues can be leveraged to offset rail construction costs.

This approach ensures that stations evolve into vibrant economic hubs rather than mere transit points, embedding rail infrastructure into the broader urban fabric and reducing the burden on government budget.

More importantly, the HSR can catalyse an acceleration in Vietnam’s urbanisation rate, narrowing the gap with more developed economies. China’s experience between 2005 and 2012 illustrates how HSR projects can unlock growth potential across financials, construction, and real estate sectors.

Overall, we see Vietnam’s HSR initiative as more than a transport initiative. It is the ultimate test of the country’s ability to deliver a complex, large-scale, and potentially nation-shaping investment. For investors, the HSR represents a multi-year thematic opportunity across construction, real estate, banking, and modern trade.

And for the nation as a whole, the HSR can be a symbol of Vietnam’s new growth era, positioning the country as one of Asia’s most compelling economic stories.