Vietnam's wood industry will benefit from residential construction

The General Department of Forestry reports that there are 115 enterprises in Vietnam's wood sector that directly produce industrial wood, 53 of which are FDI operations. 

>> What is Vietnam wood industry's export market outlook?

In 2022F, the real estate market may experience a volume-driven revival as developers accelerate their contracted sales to increase cash flow. The strong presale growth projection for FY22F, with KDH (14x yoy), DXG (300% yoy), and NLG (105% yoy) on the back of FY21's low base and the resumption of the delayed projects from FY21 because of COVID-19, serves as evidence of this.

Recovery of residential property

On the strength of the low base in FY21 and regulatory measures like Decree 148/2020/ND-CP and the Amended Construction Law 2020, Mr. Nguyen Duc Hao, a VNDirect expert, anticipates that the supply of new condos in HCM city would recover rapidly by 40–50% in 2022–2023F.

According to CBRE, the new condo supply in the HCM city would increase by nearly 50% year over year in 2022F to 22,000 units and by up to 40% year over year to 33,000 units in 2023F, with the mid-end segment contributing between 30 and 50% of the overall condo supply.

In Mr. Nguyen Duc Hao’s view, the development of the infrastructure in the suburbs of HCMC, including Binh Chanh, Can Gio, Nha Be, and Thu Duc, would put them in the spotlight in 2022F.

Mr. Nguyen Duc Hao anticipates a steady contribution from Vinhomes' sizable projects to a 40–50% yoy growth in the number of new condo units available in Hanoi in 2022–23F, reaching 25,600 units–36,000 units. Township launches in 2022F will continue to affect the market's new supply of landed properties.

CBRE estimates that the absence of Vinhomes' huge project will cause the new supply to decline by 40% year over year to 1,500 units in 2022F. The market is anticipated to receive fresh offerings from brand-new megatownships like Vinhomes Wonder Park and Vinhomes Co Loa as well as the debut of upcoming phases from communities like EcoPark and Gamuda City.

Opportunities for wooden manufacturers

The General Department of Forestry reports that there are 115 enterprises in Vietnam's wood sector that directly produce industrial wood, 53 of which are FDI operations. With a market share of roughly 55%, ACG is the biggest producer of engineered wood in Vietnam. AICA, Casta, and VRG Dongwha—the proprietor of Vietnam's second-largest MDF factory—are some other significant participants. Additionally, a few additional businesses, like Minh Long, Moc Phat, and Thanh Thuy, are little wood producers with a tiny market share.

While ACG, TTF, AA Corporation, and The One are among the large corporations in the finished goods and furniture sector. When compared to other companies in the sector, ACG has the largest revenue and NP.

"We anticipate that well-known wooden panel producers with a loyal clientele, like ACG and TTF, would profit from the strengthening residential real estate sector. While TTF has also provided wood furniture for significant projects like the Vinpearl Riverfront Condotel, Vinhome Central Park, and Crowne Plaza Phu Quoc Starbay, ACG is a well-liked option among many real estate developers like Vinhomes, Novaland, and City Land”, said Mr. Nguyen Duc Hao.