Industrial Real Estate - Profits of real estate enterprises in industrial zones in the second quarter of 2022

From the beginning of 2022, VNDirect Research has determined that industrial real estate will maintain its attraction with two dual drivers including (i) high demand and (ii) accelerating expansion of new supply. Both FDI and domestic enterprises are promoting production expansion, along with the explosion of e-commerce, increased inventory requirements, and diversification of supply chains helping to boost demand for land for warehousing services and accelerating public investment in supporting infrastructure. Besides, enterprises are also expanding to capture rental demand in the period of 2022 - 2025 before the wave of production shifts from China to Vietnam.

The overview of profit of industrial real estate has a clear differentiation

In favorable circumstances, industrial real estate enterprises all reported profits in the second quarter of this year. However, the overview of profit in the second quarter of 2022 shows the divergence between enterprises with industrial zones having available land for lease and enterprises having filled industrial zones or expansion projects.

Enterprises having available land for lease such as Idico Corporation (IDC), Viglacera Corporation (VGC), Industrial Development and Investment Corporation (BCM), Tan Tao Investment and Industry Company (ITA), and Kinh Bac Urban Development Corporation (KBC) reported a sudden increase in profits compared to the same period last year, from 6 to 25 times.

Meanwhile, enterprises with filled industrial zones that no longer have available space for lease, or are having expansion projects preparing to lease, the business results in the second quarter witnessed a downward trend compared to the same period.

Industrial real estate is still bright in the second half of the year

According to the SSI Securities Analysis Center (SSI Research), in the second half of 2022, the profit after tax of industrial real estate will increase by 47.3% over the same period, thanks to the expected industrial land demand. A positive recovery is expected when the economy opens, and rents are expected to continue to increase by an average of 8-20%, depending on the region.

SSI Research also continues to assess that industrial land rental demand will still grow positively in 2023 thanks to the continuing trend of shifting production from China to Vietnam and policies to attract FDI will also promote investors returning to Vietnam.

By 2023, SSI Research estimates that the net profit of listed industrial zone developers will grow by about 18% over the same period last year, due to a 10% growth in the total area of ​​leased land per year and the projected land rental price is expected to increase by 8% in the southern industrial zones and 6% in the northern industrial zones.

However, in terms of risks, SSI Research said that the occupancy rates of industrial centers such as Binh Duong, Dong Nai, and Bac Ninh have all reached over 80%. The time for compensation for site clearance is slow, leading to a small supply of land in the remaining industrial zones, affecting the leasing of large areas.