Construction & Real Estate
From The Report: Papua New Guinea 2014
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From 2008 to 2012, the construction sector posted average real annual growth of 20.4%. The value of construction projects in 2013 was estimated at $1.4bn, up from the $1.2bn in 2012, $984m in 2011 and $744m in 2010. A host of big-ticket items are listed in the 2014 budget, including $577m to construct and maintain roads and bridges; $152m to finish facilities for the 2015 Pacific Games; $25m for housing and land development; $91m for university infrastructure; and $109m for hospital redevelopments. Although there has been some sector deceleration, much of this is being offset by a substantial surge in government outlays for infrastructure. Meanwhile, growth in property values is slowing and demand is starting to cool as the unprecedented property demand surge prompted by the Papua New Guinea Liquefied Natural Gas (LNG) project has begun to subside. This decline has led to market correction in certain areas, but some real estate categories have been affected more than others. With an estimated 28% of the urban population in PNG living in informal settlements, the government has been rolling out a number of policy changes to reduce this figure to 15% by 2030. One industrial development that could become a game changer received new life in 2013: the prospect of moving forward with the long-dormant Konebada Petroleum Park. Any rebound in the kina should help stabilise property prices, with real GDP projected to grow through to 2018 as revenues from PNG LNG and other resource extraction projects begin to materialise in late 2014. This chapter contains interviews with Francis Awesa, Minister for Works and Implementation; Stuart Bowman, Country Manager & Director, Leighton PNG; and James Lau, Managing Director, Rimbuna Hijau (PNG) Group.

Articles from this Chapter

Overview

Increased public spending aims to keep the sector on an even keel
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Roused by an adrenaline shot from the $19bn Papua New Guinea liquid natural gas (LNG) project that kicked the country’s construction sector into overdrive from 2009, the industry must now prove it has the staying power to sail smooth in the years after the boom, when the sector made up as much as one-fifth of real GDP. So far, the state looks to be taking the lead in filling the spending gap. Its annual capital expenditures have increased sharply in the 2013 and 2014 budgets, and a host of big-ticket…

Interview

The road ahead: OBG talks to Francis Awesa, Minister for Works and Implementation
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Interview: Francis Awesa How will the government implement the 2014 national budget when it comes to transport? FRANCIS AWESA: This administration is fully conscious that, without an efficient transport system, no country is able to thrive in today’s modern economy. This is true for both mature markets and emerging ones, like Papua New Guinea. That is why the 2014 budget puts infrastructure at the forefront of its priorities. Linking all ports, airports, urban centres and rural areas is one…

Analysis

Ways and means: Efforts to maintain vital road links in rugged terrain and harsh weather
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The Highlands region of Papua New Guinea is not merely the nation’s geographical heart; it is also a crucial contributor to the economy, yielding agricultural products, minerals and energy exports. Home to roughly 40% of the country’s 7m people, this region, PNG’s most densely populated, is comprised of the provinces of Simbu, Eastern Highlands, Enga, Hela, Jiwaka, Southern Highlands and Western Highlands along an east-west zone of mountains with elevations of more than 4000 metres. Its jagged…

Interview

OBG talks to Stuart Bowman, Country Manager & Director, Leighton PNG
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Interview:Stuart Bowman How can the local construction industry benefit from increasing competition in order to bring its standards to international levels? STUART BOWMAN: With competition increasing, the biggest issue confronting the construction industry in Papua New Guinea is how to cultivate productivity. The key to doing so is education. By introducing a contractor grading process similar to the Singapore Building and Construction Authority (BCA), contractors could be equipped with the…

Overview

After a roaring half-decade, the industry is gradually slowing down
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After a wildly successful five-year run on the back of heavy investment that came with the global economic recovery, the real estate sector in Papua New Guinea is moving out of the fast lane. Growth in property values is slowing and demand is starting to cool. The unprecedented demand spike linked to ExxonMobil’s $19bn PNG liquid natural gas (LNG) project, which drove a surge from 2009, has since been tamed by the addition of new stock across all subsectors of the market, following a flurry of…

Interview

OBG talks to James Lau, Managing Director, Rimbuna Hijau (PNG) Group
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Interview:James Lau How would you assess Papua New Guinea’s investment climate when compared to the wider region? JAMES LAU: The investment climate is mixed; however, there is recognition that PNG will require overseas funds if the country is to achieve its development goals and meet its potential as a major exporter to Asia. As PNG is rich in natural resources, it is an attractive target for mining and energy companies. However, the country’s current stage of development means that some…

Analysis

Efforts to reform the country’s land title system
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The recent influx of people and investment into the National Capital District (NCD) has sent demand for housing through the roof, changing the area’s social and economic climate in ways that have severely tested the regulatory framework that currently governs the construction and real estate sector. A key contributor to the spike in property prices is the country’s customary land title system, which makes it difficult to free up land for development, rental, sale or use as collateral. Compounding…