Prospects abound for land-rich industrial players
Prospects abound for land-rich industrial players
Industrial real estate is increasingly securing the limelight in Vietnam following the shift in investment flow, heralding strong prospects for the remainder of the year.
According to Ngo Thi Kim Thanh, senior expert at the Investment Analysis and Consulting Centre for SSI Research, the land lease demand in industrial zones (IZs) continues to secure positive growth for 2022 and beyond. This is attributable to diverse factors such as China’s strict pandemic policy, and reopened borders – paving the way for foreign investors to strike new deals or wrap up land lease procedures which were signed earlier.
Thanh gave the remarks at a talk show on the charm of real estate tickers, hosted by VIR in Hanoi last week.
In the stock market, the performance of real estate tickers is being deemed a bright spot in the context of a lasting market correction since April.
During the period, the ticker IDC of IDICO Corporation gained more than 20 per cent, KBC of Kinh Bac Urban Development Corporation rose more than 15 per cent, and VGC of top building material maker Viglacera doubled. Real estate firms holding large swathes of land would envision better growth scenarios with higher profit margins.
IDICO Corporation, which possesses more than 700 hectares of cleared land, is one example. According to Phan Van Chinh, the company’s deputy general director, preparedness is always important in industrial real estate as it takes anything from three years to a decade to develop an IZ and have a plethora of offerings. “In past years, IDICO has embraced a pipeline of projects to be able to secure a big suitable land fund for future constant development,” said Chinh.
Thanh from SSI Research forecast that real estate tickers will continue to grab the market attention in the rest of 2022 and in 2023, but there will be a division in business results. “The tickers of developers with vast available land such as IDC, BCM, KBC, and VGC have rosy potential. As for valuations, we view IDC and BCM as having ample room for price upsurge,” Thanh said.
However, in the context that capital flows into the stock market have not yet been as fruitful as in 2021, Thanh assumed changes would occur swiftly in the performance of stocks in different sectors, and in the market generally.
Disbursement of foreign direct investment was reported to hit $11.57 billion in the first seven months of this year, up 10.2 per cent jump on-year, showing foreign investors still consider Vietnam as a safe and attractive investment venue.
Fresh research by property consultancy firm JLL showed that the rental rate in the northern region rose 6-7 per cent on-year, while in the south it grew 8-9 per cent. Thanh assumed that higher rental is commensurate with the current escalating site clearance costs due to the application of a new land pricing scheme for 2021-2025. Simultaneously, a spike in building material prices in 2021 has driven up infrastructure construction costs at IZs.
Thanh also noted that rising rentals would partly alleviate increased land acquisition and IZ infrastructure construction costs.
