Construction & Real Estate
From The Report: Papua New Guinea 2017
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Although it recorded double-digit expansion during the boom years of 2010 to 2013, Papua New Guinea’s construction industry faces a challenging operating environment in 2017. Growth contracted in 2014 following the completion of a major liquefied natural gas project, and contractors have since struggled to regain the momentum seen earlier in the decade. The sector rebounded in 2015 and 2016, with preparations for the 2015 Pacific Games and the APEC 2018 summit helping to maintain stability. Although the real estate industry is experiencing a downturn, a moderation of unsustainably high prices is expected to benefit long-term growth. Affordable housing also retains considerable potential for future expansion, and recent consumer sentiment surveys reveal pent-up demand for mid-market properties.

This chapter contains an interview with Jason Yip, Managing Director, DAC Real Estate.

Articles from this Chapter

Overview

Priority works: As public spending is cut, increasing private participation in major projects is crucial
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Although it recorded double-digit expansion during the boom years of 2010 to 2013, Papua New Guinea’s construction industry faces a challenging operating environment in 2017. Growth contracted in 2014 following the completion of a major liquefied natural gas (LNG) project, and contractors have since struggled to regain the momentum of earlier in the decade. The sector rebounded in 2015 and 2016, with preparations for the 2015 Pacific Games and the APEC 2018 summit helping to maintain stability,…

Analysis

Hospitality focus: The capital is set to see rapid growth in room capacity as it prepares for the 2018 APEC summit
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Hotel supply has risen dramatically in Papua New Guinea’s capital city, Port Moresby, over the last decade, as construction of the PNG LNG project saw thousands of expatriates and business travellers flock to the city, straining limited supply of high-end rooms. With nearly 3000 new hotel rooms expected prior to the 2018 APEC summit, the city appears to be well-positioned to meet an anticipated surge in foreign arrivals, despite delays on several high-profile planned projects. The challenge…

Overview

Market moderation: Rental prices have fallen as supply exceeds demand, while the affordable segment presents opportunities for growth
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The business climate for real estate stakeholders in Papua New Guinea deteriorated in 2017, with rental rates at upmarket residential properties in the capital, Port Moresby, falling by as much as 50% since 2016. A macroeconomic slowdown and lower numbers of expatriate employees living in the country will weigh on growth in 2017, with agencies reporting that hundreds of units are sitting empty in the city, even as demand for more affordable rentals rises. However, this also marks the end…

Analysis

In demand: Property ownership is a high priority for many citizens, but affordability remains an issue
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With demand for high-end residential rentals declining significantly over the past year, the affordable housing segment is a bright spot in Papua New Guinea’s real estate sector and holds high potential for development, particularly in Port Moresby. Recent surveys have revealed considerable pent-up demand for property ownership in the country, with affordable housing purchases expected to keep the industry on a steady growth path despite the ongoing downturn. Limited availability of land…

Interview

Looking ahead: Jason Yip, Managing Director, DAC Real Estate, on future developments and challenges in the local market
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Interview: Jason Yip Will real estate prices in Papua New Guinea level out in the short to medium term? JASON YIP: We expect to see prices levelling out by the end of 2017 to mid-2018. There is always some uncertainty leading up to and during an election year, and this period has been no different, as corporations are taking a conservative approach to investment and expansion decisions. Once we have an indication of the direction of future policies, this will give businesses a better platform from…