- 28 July 2021
Industrial real estate enterprises: The picture of mixed profits
The new Covid-19 outbreak occurred in critical industrial clusters, affecting FDI inflows. Many industrial real estate enterprises announced their business results in the second quarter of 2021 with a mixed profit picture.
Recent Covid-19 outbreaks have occurred in industrial parks in critical industrial clusters across the country. It includes Bac Ninh and Bac Giang in the North and Binh Duong, Dong Nai, and Ho Chi Minh City in the South. Besides the cautious view of tenants about Vietnam’s Covid-19 control in the short term, the Covid-19 epidemic and social distancing measures will prevent potential tenants from coming to Vietnam to negotiate.
However, some bright spots are showing the industry’s recovery, such as the epidemic in Bac Giang and Bac Ninh provinces have been controlled; Since March 2021, FDI inflows have recovered. Total registered FDI capital in the first six months of the year reached 15.3 billion USD, down slightly by 2.6% over the same period in 2020. The newly registered FDI capital reached 9.5 billion USD, up 13.2% compared to the same period last year. Disbursed FDI reached US$9.2 billion, up 6.8% over the same period. At the same time, it is expected that FDI inflows will continue to recover when Vietnam has well-controlled the epidemic, and commercial flights will be resumed when vaccines are widely used.
Regarding the medium-term outlook, Vietnam’s industrial park real estate industry can benefit from signed free trade agreements (FTAs) and the wave of companies moving away from China. Accordingly, the demand for land for industrial zones and ready-built factories has increased. Localities are also actively promoting the expansion of industrial parks to catch the investment wave. In addition, boosting public investment to help improve connectivity between regions, connecting Vietnam with the world is also a factor attracting FDI in the future.
At the same time, the market is experiencing a shortage of available land for lease. This results from difficulties in compensation and site clearance, mainly in industrial zones in Dong Nai and HCMC. The group of businesses has almost no new leased space. In fact, in the fourth quarter of 2019, revenue from Tam Phuoc 18 ha KDC and rental revenue of Tin Nghia decreased sharply over the same period.