The exodus of expats from Papua New Guinea due to COVID-19 has had a dramatic effect on the country’s real estate sector. Robert Upe reports.
Real estate developments such as Edai Town outside Port Moresby, are aimed at PNG’s aspirational middle class. Credit: Godfreeman Kaptigau
Vacancy rates in Papua New Guinea’s capital Port Moresby have skyrocketed, especially at the higher end of the market, and rents have fallen by up to 50 per cent.
According to Brian Hull, Executive Chairman of Century 21 Siule Real Estate in Port Moresby, vacancy rates currently range between 30 and 90 per cent.
‘There are vacancies everywhere [residential and commercial] and the prices are being driven down,’ he tells Business Advantage PNG.
‘The exodus of foreigners occurred due to fear of COVID-19 and their non-return can be attributed to ongoing concerns about the pandemic, as well as the Government’s “take back PNG” stance.’
‘We manage 130 units for one landlord whose rents from two years ago have come down from K3500 to K2000 per week,’ says Hull, whose business has offered realty and property management services in PNG since 1973. ‘Lesser units that were fetching K1500 are down to K900 or K800.
‘The smart landlords are following the prices down. They’ve probably got a 30 per cent vacancy rate. We’ve got others [landlords] who won’t follow the prices down and they have a 90 per cent vacancy rate. Previously, there were waiting lists.’
Return?
Century 21’s Brian Hull.
Hull isn’t confident expats will return in any great numbers any time soon.
‘The exodus of foreigners occurred due to fear of COVID-19 and their non-return can be attributed to ongoing concerns about the pandemic, as well as the Government’s “take back PNG” stance,’ he says.
In Hull’s opinion, there appears no great interest from PNG’s government in getting expats back into PNG.
Home ownership boom
However, a positive side effect of there being less expat workers is that home ownership is growing among Papua New Guineans, especially those who have been promoted into positions previously filled by expats.
The biggest take up is being seen in the affordable housing sector at places such as 8 Mile and Edai Town, where less than K500,000 buys a townhouse or a duplex.
‘You can get a very pleasant house on land for that amount of money,’ notes Hull.
He says Bank South Pacific’s 40-year First Home Ownership Scheme Loan, with four per cent interest and 10 per cent deposit is popular.
‘It’s just wonderful if you qualify for it,’ he says.
However, potential buyers may have to show some patience. There is currently a backlog of approvals for land deals by the Lands and Physical Planning Minister, John Rosso, who tested positive for COVID-19 earlier in the year.
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We are trying to go into such businesses, would it be better for us to go into this business at this time of pandemic, and how best we are to archive.
Don’t believe it, Mr Hull. The problem right now is, businesses selling up and moving out because of government’s inability to handle or manage the economy and passing the blame on the pandemic. Where is the government getting its statics from and is it truthful as they say. By this time half the population would have been dead because of appalling health services we have in this country. I also work in the real estate industry too.
Brian is not 100% correct in his statement why expats were leaving. There are plenty who have stayed and are still working in PNG and especially Port Moresby. I know of expats stuck in Australia and NZ who want to get back there to continue their jobs, but the border closure between Aust and PNG has made that impossible. It is two major things, and not because expats are scared of COVID-19 there.
Thanks to what has happened politically in PNG in the last few years, the economy crashed, any many expats were sent home by companies there. This continued through 2019 as well, and talk of the economy getting back on its feet stalled yet again, and more expats left.
It was only expats working with the AFP, DFAT or Aussie High Comm that were repatriated due to COVID-19 in PNG. These numbers are far less than the amount of expats that lost jobs due to the crashed economy.
When Exxon, Total, LNG deals started to fall apart several years ago this made matters worse.
The nail in the coffin was the closure of Porgera. When this closed and the minerals stopped being mined at one of the worlds biggest gold mines, the economy, Forex and everything else crashed again. PNG currency was devalued again as there was no gold or precious minerals coming out of the ground to strengthen the countries economy.
Rental properties were empty at The Edge apartments a long time before COVID-19 came to town.
My husband has been working in PNG since 2013 and he’s still there today. His pay increased last year even after covid. He’s an expat on one of the real estates in PNG