Industrial Real Estate: Expectations for Acceleration from 2027

According to SSI Research, the net revenue and net profit of the industrial real estate sector fell by 20.2% and 40%, respectively, in the first half of 2026, totaling 38 trillion VND and 4 trillion VND. Major companies like BCM, KBC, and D2D experienced significant profit declines due to a lack of large land sale transactions and rising interest costs. Conversely, IDC and VGC reported profit increases due to improved land absorption and a recovery in construction material demand.

Looking ahead, SSI Research predicts that new lease agreements and memorandums of understanding (MOUs) for industrial real estate companies will reach approximately 1,000 hectares in 2027, marking an 18.6% increase from 2026. This growth will be primarily driven by secondary industrial zones, as foreign direct investment (FDI) companies continue to relocate and expand their operations.

Demand is expected to be bolstered by tenants from China, Taiwan, and Hong Kong, who are anticipated to be significant contributors to the demand for new industrial zones. Additionally, new industrial land supply is projected to accelerate from the fourth quarter of 2026 into 2027, with a total expected supply of about 1,347 hectares, including 664 hectares in the north and 683 hectares in the south.

In the northern region, the supply will be concentrated in provinces such as Bac Ninh, Thai Nguyen, Hai Phong, and Hung Yen, while the southern region will see new offerings in Dong Nai, Binh Duong, Long An, Tay Ninh, and Ba Ria - Vung Tau.

However, rising investment costs continue to exert pressure on profit margins. SSI Research indicates that the profit margins for new industrial projects may drop to 30-35%, compared to over 50% for existing industrial zones. The average rental prices for industrial land are expected to remain stable in 2027, with competitive pricing strategies being employed to attract tenants and increase occupancy rates.

Despite these challenges, the long-term outlook for industrial real estate remains positive, supported by ongoing infrastructure improvements. Projects such as the North-South Expressway and expansions of existing highways are expected to reduce logistics costs significantly.

New FDI incentives, including Resolution 10-NQ/TW and the amended Investment Law, are also anticipated to attract more foreign investment by streamlining administrative procedures and enhancing local government authority.

Nonetheless, risks persist, particularly due to Vietnam's additional import tariffs under Section 301, which could impact the expansion plans of labor-intensive sectors such as textiles and footwear. In terms of profitability, SSI Research estimates that the total net profit for 2027 from industrial park investors and rubber companies involved in land conversion will reach 22.3 trillion VND, a 12.4% increase from 2026.

VGC is expected to see the strongest profit growth, with a projected 29% increase driven by contributions from new industrial zones and ongoing projects. Overall, the industrial real estate sector is poised for a recovery, with key players like VGC and IDC showing promising prospects for maintaining strong cash dividends.