Public opposition delays deep sea mine project
High stakes for PNG as Garnaut and BHP lashed

Real estate growth in PNG overlooks low cost sector

Oxford Business Group

Property development in Airvos AvenueFOREIGN INVESTMENT HAS BEEN FLOWING into Papua New Guinea real estate ever since the $15.7bn ExxonMobil-led liquefied natural gas project was announced.

In just five years, real estate development surpassed the total of the previous 15 years, transforming the once peripheral real estate market into one of the region’s best-performing sectors. However the growth has come at a cost.

New investments disproportionately favour high-end residential and commercial properties offering the highest returns and have exacerbated the pre-existing shortage of affordable housing.

Rent for up-market units, for example, more than doubled in just four years to between K5,500 and K8,000 a week.

This has led to a migration into shanty towns and informal housing settlements across the country, and rocketing construction costs have further eroded investor interest in the low-cost segment.

According to LJ Hooker Real Estate, one-third of Port Moresby’s population, including almost 50% of the middle-class work-force, is affected by housing shortages.

This means there is further potential for growth, particularly in the lower and middle-class real estate segments.

A widely anticipated reduction in construction costs post-2014 may help realise the sector’s potential, with assistance from both public and private sectors.

The fledgling Office of Urbanisation’s ambitious blueprints to provide affordable housing nationwide could provide the necessary catalyst for change.

Some 27 cities and urban centres, including five designated “mega-cities”, with projected populations of over one million people (Port Moresby, Lae, Wewak, Tari and Kokopo), have been earmarked for urban renewal and expansion under the National Urbanisation Policy 2010-30.

Two affordable housing pilot developments are already underway in Torama Valley, Port Moresby, and the Goroka Valley.

As PNG’s real estate market faces an inevitable price correction in the coming years, the availability of more affordable housing for the lower and middle-income segments should increase.


Feed You can follow this conversation by subscribing to the comment feed for this post.

Tony Flynn

I grew up in a terrace house in England near Liverpool. These brick houses must be now over 100 years old.

They were built onto the footpath and had a tiny back yard. Any one who wanted a garden could rent an allotment where kids like me could steal rhubarb and strawberries.

They have been converted to have a bathroom and toilet inside since my days of an outside toilet.

Housing development here has been influenced heavily by the Australian "house on a suburban block". Other tropical countries have two and three story brick terraces which appear to be acceptable to the people.

We can fit many more people into low cost high density housing in the inner city areas. Forget about the House and Suburban Block.

Rich people should live in the suburbs - they have got cars. Let the not so well off populate the inner city areas in high density housing.

Without the use of insecure and unreliable public transport life would be more supportable.

Steven Gimbo

The bubble will burst soon enough and all prices will come tumbling down, including a nationwide recession. Our economists haven't learnt from the US, Japan, Europe and now China.

China spent billions investing in high class real estate and pushing prices until the bubble burst, now some of their cities are ghost cities, empty of tenants. The story is the same of the US, Japan, and Europe.

Real estate in PNG must be regulated and prices kept at a minimum so we do not experience this.

Right now investors are borrowing so much to invest in real estate and at the same time keeping the prices at a maximum high, but there will come a time, when they can't find the tenants, then they cant repay the debt, and then all comes crashing down around them and us!

Then it will be too late!

Ronald Nawa

I do not have visibilty on other housing projects in Port Moresby but there is a lot of activity along the 8-9 Mile area.

With these developments + others when are we likely to start seeing real estate price correction?

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)