With only 3% of land available to the government to build on and develop, the real estate sector in Papua New Guinea operates in a unique environment. Despite the majority of land being under customary ownership, with ownership rights held by extended family groups, there are still a number of opportunities for foreign investors and development in the sector, with more on the horizon if government-backed legislation, currently pending, opens up more of PNG’s land for development.

Faltering Supply

As with many of the country’s other sectors, the real estate industry experienced significant growth in connection with the infrastructure boom created by the PNG Liquefied Natural Gas (LNG) project. Housing was needed, not just for labourers and technicians but also for executives on the ground. This led to a relatively large number of high-end and medium-range housing segments being built. However, since the completion of the PNG LNG project in 2014, the demand for this type of housing has contracted. In its wake is left a real demand for affordable housing, as more and more Papua New Guineans leave rural areas to look for work in the country’s cities, with Port Moresby and Lae receiving the bulk of rural to urban migrants.

Although the government and the housing industry are working to build more affordable housing, demand continues to far outstrip supply, according to industry analysts. One certainty is that the current conditions, which have arisen as a result of rising urbanisation, shifts in the country’s demographic profile, potential new laws regarding land ownership and sale of customary land, the push for sustainability, and the fluctuating financial environment, have placed PNG’s real estate investment and development situation in flux. And while investors typically avoid uncertainty, in this situation there is the possibility of an upside. If certain legislation is passed, there could be an increase in the size of the country’s real estate asset pool, which could also bring forth an alteration in the types of real estate investment opportunities available to investors – as well as in the risks associated with them.

Foreign Investment

The state places no substantial barriers on foreign ownership of real estate, although this could be affected if an amendment to the Land Act is enacted into law (see analysis). The rental income on property earned by non-resident investors is taxed at progressive rates, from 22% to 42%. Stamp duty, which is paid by the buyer, ranges from 2% to 5% of the value of the property.

During the run-up to and construction of the PNG LNG project, foreign buyers and multinational companies showed heightened interest in buying property in Port Moresby and Lae. However, after the LNG project was finished, the number of foreigners living in PNG – which was already low – dropped further. Foreigners now comprise less than 1% of the total population, with most residing in cities. They make up a small proportion of PNG’s total population, which is estimated to stand at 7.2m, with more than 1.2m living in Port Moresby and Lae.

Foreign real estate developers – most of whom are from Australia, New Zealand, China, Malaysia and the Philippines, according to international real estate firm Century 21 – tend to invest within the city limits of Port Moresby and Lae. Average price ranges for rentals of upmarket three-bedroom apartments in these areas range from PGK3500 ($1195) to PGK5000 ($1707) per week, while office and retail space rents range from PGK850 ($290) to PGK1500 ($512) per sq metre, per year.

Strings Attached

With demand far outpacing supply, buying land in PNG can be both risky and costly. This is because there is only a small amount of non-customary (also known as alienated) land available for purchase, and its value has therefore climbed sharply. Indeed, property prices for non-customary land are relatively high, with average house prices reaching about $510,000 as of March 2016. Furthermore, the majority of alienated land is located in urban areas. Only an estimated 30,000 ha of alienated land is freehold. About 60,000 ha is used for public purposes and 200,000 ha is leased to the private sector. Urban land, where available, is often already leased by the government.

Buying & Selling

With land scarcity comes great opportunity for those who own the land, if they can reach agreements to sell it. As the economy has contracted, many customary landowners who previously would never have considered selling their land are reconsidering as a result of the increasing cost of living. Selling customary land is not a straightforward process, however; it generally belongs to a community or an entire clan, a condition that requires all landowning members to agree not only to sell their land, but also to a price and various conditions of sale.

Because of the complexity of such transactions, there have been cases where not all landowning members have given consent to a sale of land. The buyers of the land have found themselves having to negotiate a reclamation process with the customary landowners who were not included or consulted in the transaction. The ostensibly safer alternative – buying land directly from the state – can also involve significant risks. This is because some land sold with state titles may have once been customary land and, as such, still the subject of litigation.

It is therefore absolutely necessary that all property transactions be guided and negotiated by an agent who is knowledgeable in various PNG land issues and property law. As a general rule, foreign investors tend to purchase properties in PNG’s cities, with Port Moresby and Lae being the most popular locations. The main exception to this is where purchases are made by or for the extractive industries which take place where there are natural resources to mine or export.

Residential properties located within the vicinity of downtown Port Moresby and the suburbs of Gordons and Boroko showed high sales prices over the one-year period from July 2012 to July 2013, according to data published in May 2015 by the National Research Institute (NRI). The data also showed that multi-tenanted and apartment properties were often sold as one block, rather than as individual units. On the other hand, the NRI data pointed to the existence of an informal market for properties developed on land without formal urban planning approval or title. The NRI noted that properties in parts of 6 Mile, 8 Mile and 9 Mile, and in other areas, were rarely publicly listed for sale, although sales were nonetheless assumed to be taking place.

Urban Growth

With a population estimated at between 500,000 and 1m people, Port Moresby has experienced rapid population growth for the past several years, with the estimated rate topping 4% per year as of January 2016, according to a report on urban development in PNG, published in 2016 by the NRI. Alongside the rural-to-urban demographic movement, Port Moresby’s population has become both denser and broader. However, the NRI notes that the housing supply in Port Moresby has not kept pace with the demographic growth it has witnessed, characterising it as “…urban growth without formal or proper land titles or infrastructure.”

During the construction of the LNG plant, many new residential apartment buildings were built in the capital – primarily in established, desirable neighbourhoods close to town at the highest price points. Indeed, the four-year-long project construction timeframe corresponded with a three-fold increase in the price of residential rentals for secure apartments in Port Moresby, according to the NRI.

In addition to residential properties, major retail projects located in strategic areas of the city were built during the construction boom years. These included a mixed-use residential, commercial office and retail development, Harbour City at Konedobu, and Vision City Mega Mall at Waigani.

Two years after completion of the LNG project, commercial development around Port Moresby continues to perform strongly. Another mixed-use development with residential, commercial and industrial real estate areas is planned for Edai town in the Central Province, at a cost of PGK250m ($85.3m). Aimed at local middle- and upper-class executives, the development will be constructed on 155 ha of land held on a state lease and located 20 km from Port Moresby, and will house more than 2000 residents in 500 executive units.

Meanwhile, back in the capital, a substantial real estate project – the Paga Hill development at Fairfax Harbour – also seems set to get off the ground after the project developers were granted a 99-year lease and development approval. Billed as “the future of Port Moresby”, this landmark project, a long time in planning, is expected to marry proximity to downtown Port Moresby with views of the Coral Sea from a hill above the capital’s central business district. It has been named as the venue for the upcoming APEC leaders’ summit in November 2018.

The Paga Hill Development Company’s master plan includes 68 serviced apartments as part of a 200-room luxury hotel, as well as restaurants, a cultural centre, commercial space, a marina and a cruise liner terminal – all on a site covering around 22 ha. About a third of the development will be open public space, according to the company, and will include walkways and promenades that will enable visitors to walk around Paga Point to Ela Beach.

The success of the development, which has been declared a project of national significance, is viewed as key to a successful APEC summit. To deliver on this, the PNG government has promised to provide support for the development by relaxing import duties and taxes, and Powes Parkop, governor of the National Capital District (NCD) has said he fully supports the Paga Hill Estate project.

A Company Town

Compared to Port Moresby, PNG’s second city and manufacturing capital, Lae, has so far been somewhat overlooked by real estate investors and developers. Despite its location among the country’s major shipping, road and airline routes, the main developer operating in Lae has been the extractive company Hornibrook NGI.

Hornibrook has acquired large tracts of land at 9 Mile, just outside of Lae, with a view to creating a suburban residential area. The company has established the Valley View Estate on the land, which comprises more than 134 four-bedroom furnished and serviced houses. Hornibrook NGI leases out a portion of these homes to corporate tenants and the Morobe Mining joint venture (JV). The company is also building the Awilunga Estate at 9 Mile, approximately 12 km from Lae on the Highlands Highway, and in 2014 it opened the Crossroads Transit Hotel on the site.

Meanwhile, a wrinkle has emerged in the plans for the development of a new and urgently needed A$400m ($294.6m) hospital in Lae. The funding for the hospital was to be based on allocations from Australia and matched by funds from the PNG government. However, whether the development funds for the hospital will be made available is currently unknown. PNG’s national budgetary constraints, coupled with the political ramifications of the Manus Island detention centre ruling, have halted planning on the hospital for the time being.

Office Space

For the foreseeable future, the demand for commercial properties in PNG is expected to centre on Port Moresby and Lae, but even in these cities, land shortages are expected to hinder major commercial developments. A variety of new commercial office buildings have been developed in the capital in recent years, often leveraging the resources of two companies via JV partnerships. These include the ANZ PNG bank’s office building at Harbour City – a JV between PNG’s Curtain Brothers and the Australian bank ANZ PNG – and the Lands Building in Lae, which is a mixed-use building, with both office and residential space, that is widely considered a success and the result of a JV between Lamana and Nambawan Super.

Industrial Development

Consistent with patterns seen in residential and urban planning in Port Moresby and Lae, industrial real estate projects have mainly consisted of the development of isolated land parcels. Some industry observers, however, think these lack the integration and connection that underpin the growth and health of urban areas. For the most part, large-scale industrial development in both Port Moresby and Lae has proceeded on large sites controlled by a single developer. The NRI cites projects such as the Motukea Shipyard, the Avenell Engineering Systems industrial estate at Fairfax Harbour, known as Ravuvu, and Majestic Seafood as examples of this phenomenon, in which industrial developments are self-sufficient to a large extent, including possession of their own supplies of utilities and security personnel.

As an alternative to these “silo” sites, the NRI points to the Malahang Industrial Estate. The state agency Industrial Centres Development Corporation – established to implement a nationwide development programme for industrial centres – created the estate to serve as an integrated development incorporating various businesses. Located in a suburb of Lae, the Malahang Industrial Estate is designed to provide serviced land and factory facilities, with the aim of attracting private investment in manufacturing and related enterprises.

Affordable Living 

PNG’s cities and outlying suburban areas have been experiencing a housing affordability crisis for several years. The situation is severe, not only for those who are unemployed, but also for those in employment, even in the government sector. Indeed, the majority of rentals are not within the financial reach even of those earning the minimum wage. The result is that many Papua New Guineans move from rural to urban areas in search of a economic opportunities, only to find themselves living without a home or in informal housing on the outskirts of the city.

Written Into Law

To redress this lack of housing, the government has created the Affordable Land and Housing (ALH) programme. A policy initiative announced in the Medium Term Development Plan 2, covering 2016-17, the ALH programme paired the existing National Land Development programme with affordable housing initiatives. A ministerial committee under the chairmanship of Charles Abel, the minister for planning and monitoring, was established to carry out the initiative, with the Office of Urbanisation acting as the secretariat. The committee is tasked with providing affordable land and housing and delivering 40,000 housing units and/or land allotments to PNG citizens. As part of this, the national government is allotting each of the country’s 89 districts PGK1m ($341,371) to develop housing for public servants and private citizens in need of housing.

The programme, which is being coordinated by Department of National Planning, is being deployed in alignment with the Department of Lands and Physical Planning, the National Housing Corporation (NHC), the NRI, magisterial services and the civil registry. In comments made at the announcement of the launch of the ALH programme in January 2015, Abel said that the main aim was to provide housing for working-class citizens who do not own their own homes. The government has already identified parcels of land in Port Moresby, near the Jackson International Airport, as well as at Nadzab outside Lae, according to Abel. In addition, the National Airports Corporation is also making some land available for the programme.

As part of ALH, the government announced it would give out 2000 land titles in Port Moresby tocitizens free of charge, with the expectation they will build affordable homes on the land. A similar number were to be allocated in Lae, under a pilot project that will eventually extend to the entire country.

Providing Financing

Recognising the need to finance new land title owners for housebuilding on their land, the government has announced a custom-made mortgage package for the programme. The First Home Ownership Scheme (FHOS) offers first-time home buyers long loan terms at concessional interest rates. A joint initiative between the government of PNG and the Bank South Pacific (BSP), the FHOS is meant to provide qualified Papua New Guineans access to affordable home financing. The FHOS offers loans of up to PGK400,000 ($136,548) with 10% equity and a 40-year repayment period at a 4% annual interest rate. The BSP had funded up to 60 FHOS loans as of August 2015 and has pre-qualified nearly 300 civil servants for up to PGK58m ($19.8m) worth of loans to be released under the FHOS.

As a result of the ALH programme, both the national government and private sector developers have begun to mobilise to build more moderately priced housing around the NCD and in secondary cities around the country. Two pilot models, Duran Farm and Gerehu 3B, are already under development. Both projects are expected to create around 5700 serviced allotments, equal to 14.25% of the national target for new affordable housing. The government has so far allocated a total of PGK11m ($3.8m) to the Duran Farm project through the NHC and PGK3m ($1m) to Gerehu 3B project.

The Duran Farm project is part of a major master plan. Located just outside of Port Moresby, near 8 Mile, this project is expected to provide 2500 houses each year, per contractor, with units intended to house civil servants and private citizens. Setting a precedent in PNG urban development leases, for the first time the NHC and the Housing Department will fully obtain the customary land on which Duran Farm is being developed. In addition to the housing project, amenities such as schools, hospitals and banks will be constructed around Duran Farm.

A Positive Indicator

The government has solicited bids from the private sector to develop the real estate at the farm. Five companies have been awarded contracts to build 1000 houses each at Duran Farm. One of these, the Osaka-based Mirai Kaihatsu, first entered the PNG market in 2015. The only Japanese company building housing in the country, will begin building at Duran Farm some time in 2016. Many real estate experts see the Japanese company’s participation in the development as a very positive indication of overall trends in the sector. Japan has been a major long-time development partner for PNG, and with its private sector now beginning to pivot towards participating in PNG’s real estate sector, hopes are raised that more private sector developers will follow suit.

The other pilot project, Gerehu 3B, is also still under development. To be completed over the next five years, it will provide 40,000 fully serviced land allotments. In August 2015 Abel announced that a fund of PGK5m ($1.7m) for the NCD Commission to begin major civil works at Gerehu.

Meanwhile, Yumi Yet Real Estate has undertaken a purely private sector-led affordable development project located on the outskirts of Port Moresby. A medium-density tenement housing project, Yumi Yet Real Estate’s one- and two-bedroom apartments are let for PGK1500-2300 ($512-785) per month. As one of Port Moresby’s largest real estate companies, Yumi Yet Real Estate has also developed affordable housing at Gerehu, Waigani and Boroko.


With many government-led policies and programmes rolling out – including developing affordable housing, extending financial services to the unbanked, building up key cities and legislation that could free up some customary land for development – there is a good deal of potential to revitalise PNG real estate following the slowdown that came after the completion of the PNG LNG project. However, a decision on how to manage titles to leases of customary land must be made before substantial developments can begin in any area that is not state-owned.

In terms of the investment climate, PNG’s real estate sector may at first glance appear challenging, but it is not without opportunities for investors both local and foreign. More so than in most parts of the world, success for real estate investors in PNG requires maintaining a close eye on strategic objectives, managing costs and, above all, having specialist local and international expertise.

While the sector, and the country as a whole, begins to pull out of the economic slowdown, opportunities to develop real estate projects could well result in a significant increase in property supply, and lead to increased interest from international investors, brought on by lower rental and purchase costs.