Commercial real estate activity in Port Moresby and Lae remains strong despite a fall in demand for executive rentals associated with the winding down of the six-year construction phase of the ExxonMobil-led LNG PNG project.
‘The market has simply matured and there are a lot more apartments available at the moment than there have been in the past few years,’ says Brian Hull, Executive Chairman of Century 21 Siule Real Estate in Port Moresby.
‘Rents at the very top end have come down considerably, up to 30%, while at the mid-level they are down by 10 to 20%. But there has been no change at the lower end of the market; rents are exactly where they were before the so-called property boom.’
Commercial property
Demand for commercial property in Port Moresby also remains strong.
‘There has been no slowdown at all in demand for commercial property in Port Moresby,’ Hull tells Business Advantage PNG. ‘There is very high demand, especially in the Gardens area in the epicentre of the city, and also in Harbour City, where there’s a lot of high-priced premium commercial real estate.’
Port Moresby Chamber of Commerce and Industry CEO David Conn said strong business confidence and anticipation of new infrastructure projects already in the pipeline have softened the projected fallout of the winding down of the ExxonMobil-led project.
‘There may be a bit of a slowdown in the residential area until we see signs of new long-term projects but there is still a fair bit of activity. I don’t think construction is going to stop,” Conn said. ‘There’s a couple of commercial properties on the waterfront by the Steamships Trading Company, a new tower for the Treasury, Lamana Development’s projects, the ExxonMobil units at the front of Harbour City and there’s a new road being built around Paga Hill that will open up a neglected area of Port Moresby. They have tremendous plans for that area, as it’s right on the harbour.
‘The buzz is not as big as it was last year but it’s still there—more of a muted buzz,’ Conn says. ‘What I think is happening is that right now some people are biding their time, but there will probably be another spurt when the InterOil/Total LNG project gets going.’
Demand still strong in Lae
A similar picture has emerged in Lae, where softening demand for executive rentals has failed to dampen demand for, and construction of, commercial property.
‘There is great demand for commercial property but the problem is space,’ says Joe Tupana, Property Manager at Arthur Strachan Real Estate in Lae. ‘Most of the city’s commercial buildings, the workshops and warehouses, are fully tenanted. There’s plenty of demand but not enough supply. Looking at my listings at this moment for commercial space I can see there is absolutely nothing available. The problem is we have a shortage of land in Lae.’
President of the Lae Chamber of Commerce Alan McLay voiced similar sentiments:
‘Lae is the country’s commercial hub. The demand is there but the land is not, because supply is fairly limited,’ he says. ‘So, instead, what we’re seeing is a lot of redevelopment taking place. There are two new large fish factories opening soon and a few other projects. Momentum is good.’
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The residential property market demands falls by 30% this year. this is due to winding down of LNG project . Most residential houses & apartments have fall giving tenants chances to choose choose between alternatives rather than the previous years mainly 2011 to 2014 where supply was very low in which prospective tenants had no greater alternatives but were forced to into high rental areas which sometimes were unrealastice comparing to coast of living.
However, the shift in price falls is still yet to be felt by tenants as land lords are reluctant to decrease price to market level because mortgage is after most of them. This now gives rise to most houses are vacant but over the time land lords have no choice but to decrease prices.