Vietnam’s long-term appeal for FDI to boost industrial real estate stocks: analysts

Vietnam’s long-term appeal for foreign direct investment is likely to boost the stocks of industrial real estate developers in the near future, analysts say.

Since late October, stocks tied to industrial real estate have rebounded, primarily driven by strong third-quarter performances from developers.

Listed on the Ho Chi Minh Stock Exchange as IDC, IDICO Corporation-JSC saw its net profit triple year-on-year to VND574 billion ($22.6 million) in Q3 and rise 89% to VND1.95 trillion ($77 million) in the first nine months of this year.

This pushed IDC shares to VND57,000 ($2.26) on Friday from VND52,900 ($2.08) late last month.

Kinh Bac City Development Holding Corporation (HoSE: KBC) recorded a net profit of VND201.5 billion ($7.9 million) in Q3, 10.8 times year-on-year. Its shares rose from VND25,800 ($1.02) each to VND28,800 ($1.14).

Sai Gon VRG Investment Corporation (HoSE: SIP) posted a net profit of VND314 billion ($12.37 million) in July-September, up 54% year-on-year, sending its share value from VND70,200 ($2.7) to VND81,200 ($3.21) apiece on Friday.

Notably, most industrial real estate stocks surged on the news of Donald Trump's election.

Positive long-term outlook

In a recent report, analysts with Vietcap Securities have forecast that industrial park land lease sales could decrease by 24% year-on-year to 540 hectares in 2024 but rise 47% to 792 hectares in 2025 and by 12% to 885 hectares in 2026.

Vietnam’s long-term attraction for foreign direct investment (FDI) remains strong, bolstered by the global manufacturing shift to Vietnam, its competitive labor costs and participation in 16 free trade agreements, the report says.

Similarly, analysts with Agribank Securities (Agriseco) have said that industrial park real estate businesses hold substantial potential through the end of 2024, driven by high leasing demand and increasing domestic and foreign investment flows.

Current rentals are also low compared to those in the region, showing room for future hikes. In the long term, Vietnam is likely to remain a key destination for FDI, they add.

Additionally, Vietnam is emerging as a prime destination for new generation FDI, which focuses on high-tech sectors, electric vehicles, renewable energy, and semiconductors.

Furthermore, recent support policies have promoted a stable and transparent investment environment, strengthening the country’s competitiveness. Efforts to develop social housing are also driving sustainable industrial park growth.

Agriseco analysts have also forecast that the business performance of industrial park real estate developers in 2024 will continue to grow, with prospects particularly bright for those with substantial land lots available for lease.

Yuanta Vietnam’s analysts share the positive outlook, noting that industrial park real estate developers will stand to benefit most from the FDI shift toward Vietnam.