Affordable housing projects under way in Papua New Guinea, but broader efforts needed to stimulate market

Although the completion of Papua New Guinea’s flagship liquefied natural gas (LNG) project, PNG LNG, in 2014 ended the boom witnessed in the real estate sector, the momentum provided by increased construction activity between 2008 and 2014 continues to support the market. The commercial real estate sector in the capital Port Moresby has undertaken some notable projects in recent years, including the Nambawan Super Plaza and the PGK250m ($75.8m), 23-storey Noble Centre, which is expected to be completed by the end of 2019. Meanwhile, a number of housing projects are under way, and a culture of homeownership has taken hold. In 2018 the real estate sector contributed an estimated 5.2%, or PGK3.3bn ($1bn), to real GDP.

Business Landscape 

Before the arrival of Chinese and Malaysian investors, the sector was dominated by five local firms: Lamana Development, Pacific Palms Properties, Curtain Bros, Fletcher Morobe Construction and Hornibrook NGI. A common modus operandi is to vie for a project as a joint venture with one of PNG’s two large superannuation funds – either the National Superannuation Fund, more commonly known as NASFUND, or Nambawan Super, which manage almost PGK10bn ($3bn) worth of provident funds between them. The funds often take up controlling stakes in the property development joint venture project, allowing developers to offload part of the market risk and access capital at favourable terms. The interest offered by banks on the development of mixed-use property projects in Port Moresby tend to stand around 5-6% per annum, according to industry experts.

According to Lamana Development, the main expense for a developer is not the acquisition of land, which accounts for one-quarter of overall construction costs, nor is it labour expenses, which constitute about the same amount. It is the cost of building materials that can account for 50% of a developer’s budget, as a result of a heavy reliance on imports (see Construction chapter). If they can afford it, local homebuyers prefer to purchase land and hire a local constructor to build a high-set house, which is a traditional three-bedroom, sloping-roof dwelling elevated above the ground on stilts. According to a survey conducted by local property portal in 2019, 44% of homebuyers prefer this type of dwelling.

Public Housing 

While private developers have focused mostly on constructing houses and apartments for the wealthy, the responsibility of providing low-cost public housing has been left to the National Housing Corporation (NHC). Established under the National Housing Corporation Act 1990, the NHC was intended to operate as a commercial statutory authority; however, results of its efforts to provide affordable public housing have been lacklustre. In 2014 the NHC announced plans to build 40,000 affordable residential units nationwide over the next 20 years, with development costs to be covered by the state. The NHC’s plans began with the launch of Duran Farm in 2017, a joint China-PNG public housing project near Eight Mile in Port Moresby that aims to deliver 5000 homes. While some houses have been constructed, a lack of support infrastructure – such as piping, sewerage and electricity – means that the developments remain unoccupied. Falling short of expectations, the result is widely seen as symptomatic of the long-standing organisational deficiencies of the corporation. In 2009 a parliamentary public accounts committee found serious shortcomings in the management of NHC accounts, resulting in lawsuits of over PGK50m ($15.2m). In its indictment, the committee recommended the dissolution of the NHC and the establishment of a private sector-led housing trust that would manage the public housing sector.

More recently, an auditor-general report in 2016 stated that the situation has deteriorated further, citing embezzlement of funds and a lack of financial control. The NHC, which had been operating without a board since 2016, was appointed five board members in January 2019 in a bid to improve corporate governance and strategy. It is headed by a chairman, who reports to the minister for housing and urbanisation.


The volatile nature of the market is a risk to investors. During the PNG LNG construction boom years, the rapid influx of expatriates and foreign capital, and shortage of freehold land led to a significant upswing in the real estate market. However, as international oil prices slumped in mid-2014, so did the property market. House rents in prime locations have fallen by one-third from the peak of 2014, according to industry experts. Many of the new housing developments are geared to meet the needs of well-paid expatriates rather than that of locals. The demand for good rental units for corporate employees is usually short term, and tends to come in ebbs and flows. In addition, developers of real estate projects are still constrained by inadequate transport and utilities infrastructure. “It remains difficult to get water supplies and electricity to new housing projects even if there is a road providing transport access. Improvements are not happening fast enough to meet demand and unlock development,” Brian Hull, executive chairman of local firm Century 21 Siule Real Estate, told OBG.

Areas for Improvement 

To boost activity in the sector, more land could be zoned and made available for larger housing estates near areas where settlements already exist. Unlocking more land for development could be accelerated by the granting of title deeds to occupants. It is estimated that, as of July 2018, as many as 7716 residential units were built on land where titles had not been formalised. A title deed would give occupants legal ownership of the property, allowing them to either invest in its development or put the property on the market for sale.

There may also be the possibility of releasing so-called deceased estates – plots of land belonging to people who have either died or are missing – for sale. Charles Yala, principal and director at Niugini Land and Properties, estimated there could be as many as 19,600 estates with unresolved ownership rights across PNG. In addition, some 680 properties remain under the care of a trust and more than 700 properties are unaccounted for, Yala told local press in July 2018.

Town planning can be improved to ensure power, communications, water facilities and sewerage lines are installed before developers start work. Legislation for strata titles would allow a block of apartments, for example, to be divided among multiple owners. Such a reform could make homeownership more affordable and make it more attractive for investors to construct quality strata accommodation.

Reducing barriers on foreign investment in the real estate market would also help boost sector activity. However, this must be carefully calibrated to ensure such investments do not push up real estate prices to unsustainable levels. Nevertheless, foreign direct investment in new development projects should be encouraged, as this will encourage more competition in the market and reduce the risk of a real estate bubble.

Port Moresby 

According to expert analysts, the capital constitutes up to 85% of the real estate market, followed by Lae with 10%. The remaining 5% is mostly divided between Mount Hagen, Madang and Kokopo.

Property rental costs in Port Moresby remain the highest in PNG. As of September 2019 the average monthly rent for a three-bedroom apartment in the city centre was PGK13,000 ($3940), on a par with prices for similar properties in Singapore. The reason for high rental prices in Port Moresby is two-fold: the city’s rapid population growth and a shortage of housing supply. Both factors intensified during the PNG LNG construction phase between 2008 and 2014, but have since softened. The shortage of housing supply is linked to the unavailability of land: Almost 60% of the land in Port Moresby is owned by the state, while the rest is mostly under customary ownership. Individuals wanting to build their own house find it difficult to secure bank loans as they are unable to put up land as collateral.

Another problem is the absence of property titles. Apartment buildings are often sold in one complete set, and transactions on units are facilitated through sublease arrangements. Poor enforcement of tenancy agreements has compounded the problem, while many real estate agencies only cater for tenancy agreements with commercial businesses rather than individuals. This prevents many people from entering the market, increasing the likelihood of them moving to informal settlements. The 2019 survey found that 37% of respondents said they could spend between PGK200,000 ($60,600) and PGK400,000 ($121,000) on a house. While price remains a key determinant when it comes to buying property, over 20% of respondents said that the location and surrounding infrastructure was the most important factor.

In Port Moresby demand is highest for buying property in Eight Mile, followed by Waigani. The latter, however, remains the most preferred location for renting. Elsewhere, the areas of North Waigani and Hohola saw a spike in demand, which industry experts say could be due to some new developments in the area, such as the Hilton Hotel at Star Mountain Plaza.

Prosperous Projects 

Despite difficulties in obtaining land, a number of real estate projects are in the pipeline, and as many as 50,000 units could enter the market by 2020. Land around the Gerehu Nine Mile Road is available for sale, with development space for up to 4000 units. Edai Town, which is one of the larger private housing development projects, located north-west of Port Moresby, is expected to accommodate 10,000 people. The mixed-use development will include commercial, residential and industrial zones. Property prices in this area can range from PGK356,166 ($108,000) for a three-bedroom, double-storey townhouse to PGK623,975 ($189,000) for a larger traditional high-set home.

Skyview Estate is a new residential development on 22 ha of land previously known as Portion 693, Granville. The estate is located near the Air Transport Squadron settlement in Seven Mile in the National Capital District and overlooks the Jacksons International Airport. Touaguba Hill Paradise is one of the most recent apartment blocks to come on the market. It occupies a vantage point on the eponymous hill and provides panoramic views of Port Moresby’s business district and the popular Ela Beach. The block comprises three buildings which house a total of 113 units with parking spaces. Approximately 85% of the units had already been sold as early as 2018.

Luxury Segment 

Most of the country’s luxury real estate is concentrated in Port Moresby, such as the 25-ha, PGK3bn ($910m) Paga Hill Estate project. The estate is being built by the Paga Hill Development Company and is scheduled to be completed in 2028. If carried out as planned, it will feature a waterfront promenade, luxury hotels, residential apartments, restaurants, and retail and commercial space. Its proximity to APEC Haus, a modern glass and steel convention centre, and a planned cruise terminal is expected to make Paga Hill more attractive to tourists and investors. While hailed as a development with much potential to transform the capital, the project has faced some controversy that cast doubts on whether the project will come to fruition. In 2006 reports emerged claiming that Michael Nali, the former minister for civil aviation, culture and tourism, used his political power to advance the commercial interests of a close business associate. The parliamentary Public Accounts Committee concluded that the lease was awarded through corrupt dealings, highlighting the lack of transparency in the country’s real estate industry.

Another luxury real estate project in the capital is the Nambawan Super Plaza complex, which saw the second phase of its development completed in May 2019. Undertaken by superannuation fund Nambawan Super in partnership with Lamana Development, the mixed-use complex features two towers containing high-end residences and serviced apartments, and a commercial tower with 11 floors of office and retail space, and dining and entertainment options.

Elsewhere in Port Moresby, construction on the Harbourside South project commenced in July 2019. Undertaken by Pacific Palms Property, the real estate arm of local conglomerate Steamships Trading Company, the project is being constructed by China State Construction Engineering Corporation. Harbourside South is a large mixed-use development, which is being constructed on the site of the old Steamships shipping office and is due for completion in 2022.

Construction of Range View, a major residential and commercial complex along Waigani Drive, started in September 2018. The PGK296m ($89.8m) project is being undertaken by Lamana Development and will include two commercial buildings with a combined area of roughly 11,000 sq metres, and a residential compound of 88 townhouses and 140 parking spots. It is expected to be completed in 2020.


Unlike Port Moresby, Lae has not experienced the same level of real estate boom. However, the $5bn Wafi-Golpu mining project could change that, provided the government grants the required special mining lease to joint-venture partners Newcrest Mining and Harmony Gold (see Mining chapter). The mine is within driving distance to the city, and expatriates working at Wafi-Golpu will need a place to stay in Lae. Seizing this opportunity, real estate developers are already scouting locations to build hotels and other accommodation.

Other developments in Lae that are expected to create job opportunities and thus help boost the attractiveness of real estate in the city include the Bank of PNG’s PGK120m ($36.4m) currency processing facility, which opened in March 2019, while construction on the ANZ Lae corporate centre is expected to start in September 2019. While Lae has available land, industry experts argue that the right infrastructure is needed. In addition to Lae, markets such as Madang and Vanimo also hold a lot of potential for growth.


With prices having moderated in recent years, more people are willing to invest in property. Nevertheless, the outlook for the sector is mixed. Some 57.5% of respondents to the 2019 survey said it was the ideal time to buy a property. However, almost half said they would wait a year or more before putting a down payment on a property.

Meanwhile, work on high-profile affordable housing projects, such as Duran Farm, is expected to pick up speed, building on recent progress. In June 2018 John Kaupa, then-minister for housing and urbanisation, presented a cheque valued at PGK300,000 ($91,000) to the national water utility Eda Ranu to complete the water supply works at the Duran Farm. Overcoming the public housing shortage is a key challenge for the administration of Prime Minister James Marape, who has staked his claim to leadership on the promise of improving living conditions for ordinary citizens. Average vacancy rates in the capital are 30% for commercial property and 20% for residential property. To cater to the needs of the growing urban population, the government plans to increase the supply of affordable housing and lower the proportion of those living in informal settlements from 28% in 2010 to 15% by 2030.

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The Report: Papua New Guinea 2019

Construction & Real Estate chapter from The Report: Papua New Guinea 2019

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