Capital city: Port Moresby
Languages: Tok Pisin, English and Hiri Motu (official)
Population: Over 7 million
Area: 452,860 Sq km
GDP per capita: 1,845 in 2011
GDP current US$: 13 in 2011
Papua New Guinea Housing Situation and Market Overivew Case Study
Papua New Guinea is a country in Oceania, located in the southwestern Pacific Ocean region was described early 19th century as Melanesia. The capital is Port Moresby. Papua New Guinea is one of the most culturally diverse countries in the world, said to have over 840 languages. Only about one-fifth of the population lives in urban centers. The country is one of the world’s least explored and is thought to exist in the interior of Papua New Guinea housing many undiscovered species of plants and animals.
The country is rich in natural resources, including mineral and renewable resources, such as forests, marine, and in some parts for agriculture. Agriculture provides a livelihood for over three-fourth (30% of GDP) of the population. Oil palm production has grown over recent years and has become the main agricultural export, followed by coffee, cocoa and coconut oil/copra, tea and rubber. Mineral deposits, includes gold, oil, and copper, which account for about 70% of export earnings. There has been strong growth in Papua New Guinea's mining and resource sector, becoming the sixth fastest-growing economy in the world as of 2011. Despite the growth, the majority of the population still lives in traditional societies, about one-third of the population living on less than US$1.25 per day.
Legislature has enacted various laws, called "customary land title", ensures that traditional lands of indigenous peoples have some legal basis to inalienable tenure. This customary land covers most of the usable land in the country about 97% of the total land area. Only some 3% of the land is privately held under 99-year state lease, or it is held by the State and there is virtually no freehold title.
Rapid expansion in Papua New Guinea’s property market is set to be further heated by new foreign investment. However, industry players reject fears of a bubble and predict that rising prices will soon stabilize. Around 15%, or some 1m people, of PNG’s 6m population currently live in urban centers. By 2030, however, the country is expected to have around 3.5m people living in towns and cities.
The rapid urbanization represents a potential opportunity for real estate firms but creates a significant challenge for the government. In February 2012, Billy Manoka, the CEO of the Independent Consumer and Competition Commission (ICCC), said the government has identified a “critical” shortage of housing faced by Papua New Guineans and has requested the commission to conduct a comprehensive review into the housing and real estate industry in PNG.
Manoka told local media that the review, which is yet to be published, had found that high rental prices were “symptoms of significant underlying failures, represented by the inefficient and insufficient supply of raw land, organizational deficiencies and lack of clarity of government policy”.
Higher rental and purchase price are also the result of an insufficient transportation and road network that raises construction costs. To ensure more investment enters the real estate market, improved infrastructure and transparency at all levels of the property market are necessary to entice outside investors. With a more powerful mandate to fulfill its regulatory role, the ICCC would also be able to smooth the way for increasing private participation.