The property market in recent years has been heavily influenced by extractive projects and, more recently, Papua New Guinea’s hosting duties as chair of the APEC forum in 2018. These have created a serious gap in supply and demand, which has affected prices.
PNG LNG Impact
The project that had the biggest impact on the market was the $19bn ExxonMobil PNG LNG project, specifically the construction phase. Due to the influx of foreign staff and the migration of workers from other parts of the country, demand spiked quickly and property prices rose rapidly. At the market’s peak, rental rates were among the highest in the world.
Demand dropped after the end of the construction phase in 2014, and the pickup expected during the production phase has yet to occur. Falling commodity prices and the structure of payments meant that the immediate impact on the wider economy was not as significant as hoped, despite the project proving to be a highly productive, technical success. The market benefitted somewhat from the hosting of the 2015 Pacific Games, but the impact of hosting APEC in 2018 is expected to be much more positive.
Summit Demand
The APEC leaders’ summit in November 2018 is being billed as the biggest event in the country’s history. Dignitaries from around the world will be descending upon Port Moresby, creating immediate demand for tourist, hospitality and residential properties, as well as raising the profile and improving the image of the country, which has should have beneficial long-term effects. A number of major projects have been developed to meet APEC demand, such as Star Mountain Plaza, APEC Haus, OPH Tower Stage 2 and Paga Hill Estate, a 13.8-ha mixed-use complex on the waterfront.
While prices at the higher end may be boosted by APEC-related activities, it is uncertain whether these prices will hold through 2019. Some observers note that the market is already oversupplied and that visiting dignitaries are most likely to stay in serviced apartments. That said, some transactions should occur in the mid-range ahead of the main summit as various teams travel to PNG to attend policy meetings and help with preparations.
A fall in government expenditure is anticipated after the APEC 2018 summit, which may have a negative impact on rental rates. As is the case globally for hosts of high-profile international events, the authorities will be working to ensure that APEC 2018 leaves a positive legacy, not only on the country’s image, but also in terms of economic opportunities, skills development and hard infrastructure.
Long-Term Planning
Another area in need of attention is the impact of construction on informal settlements. Port Moresby, in which 60% of the land belongs to the government and the rest is customary, was most affected by the construction phase of PNG LNG. The city’s population expanded quickly, growing by almost 10% between 2011 and 2015.
As a result, the informal housing market grew rapidly, with people squatting in areas without proper connections to water or electricity. This rapid urbanisation drove demand and placed pressure on the city’s existing infrastructure.
Speaking to local media in 2017 Paul Barker, executive director of the Institute of National Affairs, noted that the process of urbanisation requires better planning and oversight, so that all stakeholders abide by the legal processes. Following APEC 2018, the market is optimistic about the impact of the next major development, Papua LNG. France’s Total is leading the investment in the $13bn project, which is expected to double the country’s LNG output. The final decision on the plan is expected in 2019, and output is expected a few years later following the construction phase (see Energy chapter). “While we expect some difficulties in the market to persist into next year, Port Moresby will be a boomtown by 2020,” Brian Hull, executive chairman of real estate firm Century 21, told OBG.
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