MBS Research: High interest rates restrain first-quarter profits of real estate firms

Against the backdrop of persistently high interest rates that have tightened market liquidity, MB Securities’ MB Research (MBS Research) says that the first-quarter earnings of real estate companies are unlikely to show meaningful improvement. In a recent report on the residential real estate sector, MBS Research offers a cautious view on profit prospects for real estate companies in Q1 2026, citing continued pressure from elevated interest rates.

Q1 2026 outlook: subdued market conditions

MBS Research assesses the real estate market in Q1 2026 as rather subdued. The main reason is that the interest-rate environment remains high and continues to rise.

Higher rates are accompanied by tighter credit for the real estate sector, which leads developers to become more cautious in launching new projects and increases financial pressure on ongoing projects.

On the demand side, buyers’ absorption capacity is also expected to decline, particularly among those using financial leverage or engaging in speculation. As a result, market liquidity deteriorates, and mild price adjustments are seen in some segments in the early months of 2026.

Offsetting factors

Despite the headwinds, MBS Research highlights several positive factors that may offset the impact of higher interest rates.

• The process of finalizing project legal procedures is expected to become clearer and more transparent, alongside policies aimed at easing legal constraints on real estate, which could improve investor sentiment.
• Accelerating public-investment projects may contribute to the value-added potential of real estate products in surrounding areas.
• Signals from the State Bank of Vietnam regarding stabilizing the interest-rate environment are expected to support monetary stability and limit further rate hikes in the near term.
• Dong Nai Province being poised to become Vietnam’s seventh centrally governed city is also viewed as supportive, as infrastructure expectations and potential capital inflows could rise and positively affect regional real estate values.

Profit growth divergence across companies

MBS Research expects profit growth in the industry to remain clearly differentiated. Companies with stronger growth are mostly driven by unusual factors such as project wholesale sales or financial income from equity transfers. By contrast, most firms are forecast to post flat results or decline modestly year over year.

It also notes that the first quarter is not typically a peak delivery period for projects, which makes it harder for real estate companies to generate a sharp revenue and profit spike.

Valuation and investment implications

While profit prospects are not yet positive, MBS Research points out that valuation multiples for real estate equities have fallen to lows relative to the five-year average and median. Given the sector’s sensitivity to interest rates, the adjustment partly reflects current difficulties, but it may also create opportunities for investors to accumulate shares of companies with solid earnings growth in 2026–2027, as share prices have declined sharply.