VnDirect: Number of factors offer support to industrial real estate stocks

The policy on promoting public investment in infrastructure, the recovery of FDI inflows, and the rise of e-commerce count among the factors supporting Vietnam’s industrial real estate sector, according to VnDirect.

The National Assembly recently approved a new economic stimulus package, in which capital for implementing a group of infrastructure development solutions totals VND113.85 trillion ($5.02 billion). In the medium-term public investment plan for the 2021-2025 period, VND570.41 trillion ($25.22 billion) will go to transport infrastructure development, or 52 per cent of total investment capital from the central budget. This will be one of the main driving forces for industrial real estate stocks.

In 2022, both foreign-invested and domestic enterprises will expand production, resulting in an increasing need for industrial real estate.
The country’s booming e-commerce sector has pushed up inventory requirements and supply chains are being diversified, both of which help drive demand for industrial land for warehousing. Strong cargo demand and supply chain disruptions have also increased the need for warehouse space, according to CBRE Econometric Advisors. VnDirect predicts that investors who own land funds in southern Ba Ria-Vung Tau province and northern Hai Phong city will enjoy the most advantages.

The expansion of new land funds in the Red River Delta and the north-central and central coastal regions will also contribute to the development of industrial real estate stocks. Land supply in Vietnam’s industrial parks is expected to increase by 44,760 ha in the 2022-2025 period to meet rising rental demand.

CBRE also forecasts compound growth in the new supply of warehouses and ready-built factories of 22 per cent and 14 per cent, respectively, in the south, and 46 per cent and 10 per cent in the north, during the 2021-2023 period.

VnDirect has assessed that the stock prices of most listed industrial park companies are at a reasonable level.