Real estate stocks at five-year low valuations as stable interest rates support investment potential

Although liquidity in the real estate market may be affected by interest rates, real estate developers with high-use-value projects and attractively valued stocks remain of interest to investors seeking to build positions.

MBS Securities has updated its profit outlook for the real estate sector for Q1 2026, saying it does not expect a broad breakthrough in developers’ profit growth, except in special cases such as recognizing wholesale profits from project sales (VHM) or divestment of project shares (PDR).

Q1 2026: Subdued market liquidity amid higher rates

In Q1 2026, the real estate market overall and the movement of real estate stocks in particular were subdued, largely due to the high and rising interest-rate environment.

Rising interest rates, together with tighter credit conditions for the real estate sector, have made developers more cautious about launching new projects. At the same time, financial pressures on ongoing projects have reduced buyers’ absorption capacity, particularly for speculative activities or high-leverage demand.

Liquidity remained weak, resulting in modest price adjustments across some real estate segments in Q1 2026. Land prices in Hanoi fell 4% from the end of 2025, while housing prices in Ho Chi Minh City declined 2% over the same period.

Offsetting factors: Legal progress and infrastructure expectations

Some positive developments are expected to offset part of the impact from higher interest rates. These include increasingly complete and transparent legal frameworks for real estate projects, with new regulations aimed at removing legal obstacles. In addition, progress in implementing public investment projects could raise the projected “use value” of real estate products in surrounding areas.

Signals from the State Bank of Vietnam also point to stabilizing the interest-rate environment, which could support monetary market stability and reduce the likelihood of further rate hikes in the near term. Separately, news that Dong Nai is expected to become the seventh centrally governed city is expected to boost expectations for infrastructure development and investment capital, potentially improving the use value of local real estate products.

Listed real estate companies with large land banks or expansion plans in Dong Nai include NVL (Aqua City project - 1,000 ha), NLG (Izumi City - 170 ha; Elyse Island - 45 ha), DXG (Gem Sky World - 92 ha), DIC (DIC Dai Phuoc - 464 ha; DIC Long Tan - 332 ha), and PDR (two smaller projects of about 4.7 ha).

Profit outlook: Limited “breakthroughs” and company-specific drivers

For listed real estate companies, strong profit growth—where expected—often depends on unusual factors such as recognizing wholesale profits from project products or financial gains from selling project shares.

Other companies are forecast to deliver flat or modestly lower profits year-on-year. The first quarter is also typically not the peak delivery period for real estate projects, which limits expectations for major profit breakthroughs in Q1 2026.

Valuations and long-term accumulation view

A key point for the real estate stock group is that valuations have fallen below the 5-year average and median, reflecting the business model’s sensitivity to interest rates. If interest rates stabilize and improve liquidity—especially in the physical segment—MBS suggests several stocks may be worth accumulating for the long term, including NLG, KDH, PDR, and DXG.

Company profit targets and price targets (2026 outlook)

• KDH: MBS projects 2026 net profit of VND 1,383 billion, up 31%. Revenue contributions in 2026 are expected to continue recognizing from Gladia low-rise (including The Solina, Bình Trưng expansion, and Tan Tao as referenced). The net profit in 2025–2026 is primarily from Gladia, with KDH owning 51%. Target price: VND 37,000/share.
• NLG: Profit forecast at VND 767 billion, up 9.5% from 2025. Revenues are expected to be lower than the value of anticipated signing due to interest-rate effects. The main driver remains the Can Tho project, Izumi, and Waterpoint Phase 1. Financial income for 2026–2027 is not expected to include a one-off gain seen in 2025 from the sale of the Izumi stake to a Japanese partner. Target price: VND 35,200/share.
• PDR: Projected net profit of VND 1,005 billion, supported by contributions from Bac Ha Thanh, Serenity Phuoc Hai, and the Thuan An 1 portion, along with recording gains from transferring the Thuan An 1 stake in 2026. In 2027, no additional one-off gains are expected. Target price: VND 20,400/share.
• DXG: Expected net profit of VND 332 billion, up 45.2% from 2025. 2026 profit is expected to be higher year-on-year due to continued handover at Gem Sky World and improved brokerage revenue. Target price: VND 19,000/share.