Published on and written by Cyril Jarnias
Real estate in Papua New Guinea is often described as one of the last “frontier markets” in the Asia-Pacific region. Behind the image of a complex country, marked by challenging geography and an economy heavily dependent on natural resources, lies a land market that is simultaneously tight, promising, and, for savvy investors, potentially highly lucrative. But investing in property in Papua New Guinea requires a solid understanding of three key realities: the land structure dominated by custom, intense urban demographic pressure, and a legal and financial framework that can sometimes be perplexing for a foreign investor.
A Tight Market, Between Housing Shortage and Project Boom
The starting point is paradoxical: Papua New Guinea displays low urbanization, with only 13 to 14% of the population living in cities, while the country has about 9.4 to 10.7 million inhabitants. Yet, major urban centers like Port Moresby and Lae are already facing a severe shortage of decent housing. Demand for housing is skyrocketing due to population growth (around 2.7% per year) and rural-urban migration, while formal supply remains limited and expensive.
The percentage that mortgage repayments can reach relative to income in Port Moresby, illustrating a vast gap between housing costs and wages.
This pressure is reflected in a spectacular expansion of informal settlements. As early as 2010, a UN-Habitat urban profile estimated that about 45% of Port Moresby’s population lived in unplanned settlements. These areas, located on either state land or customary land, suffer from a lack of water, electricity, roads, and legal security. To this day, the demand for “affordable” housing far exceeds supply, fueling rising prices and the continuous growth of slums.
The real estate market in Papua New Guinea follows the cycles of major extraction projects. The PNG LNG project (2010-2015) caused prices to skyrocket (15-20% per year) and very high rents, followed by a downward adjustment until 2019 and then a lull during the pandemic. Since 2023, new projects (Papua LNG, Wafi-Golpu) are reigniting the market, with projections of +5 to 8% annual appreciation in Port Moresby, and more in project areas.
A Unique Land Structure: 97% Customary Land
To understand this market, one must first grasp the specificity of the land system. Papua New Guinea stands out for an almost total preponderance of customary ownership: about 97% of the land belongs to clans or tribes, under traditional rules that vary by region. This land cannot, in principle, be permanently sold, nor can it be held in full ownership by foreigners. Conversely, only about 3% of the land is considered “alienated”: these are parcels that have been brought under the state’s formal system, either as state land or as private titles or long-term leases.
For a real estate investor, there are two distinct worlds: state land, often in urban areas, leasable through 99-year leases (State Leases) registered in a Torrens-type system, and vast customary lands, where direct investment is complex, if not impossible for a foreigner without using a registration or intermediation mechanism.
Over the years, the state has attempted to open part of this land to the formal economy. Mechanisms like the Incorporated Land Group (ILG) and the Voluntary Customary Land Registration (VCLR) have been established to allow customary groups to incorporate, register their parcels, and then sign leases or partnerships with investors. Theoretically, these tools can generate a “win-win” development: customary landowners secure their rights and monetize their land, the state sees housing and infrastructure develop, and investors get a clearer legal framework.
The VCLR process, with up to 17 steps and 7 agencies involved, can last from over a year to four years. Disputes, incomplete information systems, and risks of corruption (multiple sales, duplicated titles) push developers to favor state land, despite high prices and long administrative delays.
An Evolving but Still Fragile Legal Framework
Legally, Papua New Guinea combines a constitution that strongly protects land rights, a set of specific laws (Land Act, Land Registration Act, Land Disputes Settlement Act, Investment Promotion Act, etc.), and frequent recourse to customary law. The Constitution, adopted at independence, recognizes customary land rights and prohibits arbitrary deprivation of property. The Land Act of 1996 governs land acquisition by the state and the granting of leases, while the Land Registration Act of 1981 regulates title registration.
The Duran Farm project and some public housing initiatives in Port Moresby illustrate the risks associated with the lack of a regulatory framework. They are characterized by ambitious goals, implementation difficulties, suspicions regarding land titles, and massive delays, leaving buyers without clear recourse in case of project abandonment or developer bankruptcy.
Furthermore, there is a lack of a national land-use planning and housing policy. While a National Urbanisation Policy 2010-2030 was adopted and the country works with UN-Habitat on programs for upgrading precarious neighborhoods, there is still no fully implemented national housing policy, nor an updated and operational land-use policy. This translates on the ground into construction that bypasses urban planning regulations and building codes, even when they exist, and an inability of the state to control the expansion of informal settlements.
The government has launched the digitization of the land register at the DLPP to limit fraud and errors. A strata titles law has been prepared to allow the sale and management of individual units in a building, thus facilitating residential development and buyer protection, despite delays due to the pandemic.
Foreigners and Property Access: Leases, Companies, and Certification
For a foreign investor, the key rule is simple: only a citizen of Papua New Guinea can directly hold land in freehold. Foreigners cannot buy customary land, nor – except in very limited historical cases – own freehold. In practice, three main avenues are open to them for investing in real estate:
In Papua New Guinea, the state can grant state leases of up to 99 years to individuals or legal entities, including foreigners with authorization. These leases, which can be assigned or sub-leased with the consent of the Minister for Lands and often the Land Board, constitute the main mechanism for developing large private residential estates, as illustrated by projects like EDAI Town or Harbour City in Port Moresby.
The second is to establish a company under Papua New Guinea law, sometimes in a joint venture with a local partner. Investment law, via the Investment Promotion Act, requires “foreign enterprises” to obtain a certificate issued by the Investment Promotion Authority (IPA). This certification requires a minimum investment – typically around 100,000 kina – and prohibits involvement in certain sectors reserved for nationals. Once the company is registered, it can hold leases, buy buildings, sign rental contracts, etc.
The third, more sensitive avenue concerns projects on customary land via ‘business leases’ or the National Land Development Program (NLDP). These arrangements, involving ILGs, voluntary registration (VCLR), and state lease reversion, require fine legal expertise, strong mediation with communities, and tight administrative oversight to avoid disputes or subsequent compensation claims.
In all cases, a non-resident investor must obtain certification from the IPA, have significant transactions approved by the Minister for Lands, and comply with exchange controls managed by the Central Bank. Transactions above a certain foreign currency threshold are subject to enhanced due diligence procedures, particularly under new exchange control directives.
Case Study: EDAI Town, a Private New Town
Amid this complex landscape, some projects illustrate what a well-structured partnership can produce. EDAI Town, northwest of Port Moresby, is an iconic example. Carried by JC-KRTA Consulting Group (PNG) Ltd in association with the customary landowners of Boera village, this new town project is being developed on state land about 22 kilometers from the capital, between the PNG dockyard (9 km) and the PNG LNG project site (6 km).
Duration in years of the state leases granted for the development of EDAI Town in 2014.
The financial structure is based on a legally binding Lessor/Sub-Lease mechanism offered to buyers. This mechanism entitles eligible buyers to Bank South Pacific (BSP)’s First Home Ownership Scheme Loan, a public affordable housing loan program. For a land + house package (two bedrooms) at EDAI Town, the target price could reach 420,000 kina, an amount financeable under the scheme. A study showed that for the first phase, primary infrastructure (roads, utilities, etc.) represented about 30% of the total project cost, or over 12 million kina. These figures give an idea of the weight of infrastructure costs in a country where almost all materials and equipment are imported and electrification remains very partial.
This type of project highlights several essential elements: the strategic importance of location (proximity to a major gas project and an industrial dockyard), the key role of long-term state leases, the possibility of linking private real estate promotion with public financing programs, and the need to invest heavily in basic infrastructure to make large-scale subdivisions viable.
Prices, Rents, and Yields: A Dual Market
Available data shows a deeply segmented market. In central neighborhoods of Port Moresby – the historic “Town,” Touaguba Hill, Paga Hill, Ela Beach – sale prices for high-end residences can range from 4 to 8 million kina for a luxury villa or apartment. In Boroko or Korobosea, a three-bedroom house can trade between 800,000 and 2 million kina. In more popular neighborhoods like Gerehu or Hohola, a “modest” three-bedroom house can still cost between 900,000 and 1.5 million kina, according to recent accounts from local players.
Median monthly rent can exceed 13,000 kina for a three-bedroom apartment in downtown Port Moresby.
The tables below provide an overview of some orders of magnitude, synthesizing several recent sources.
Order of Magnitude of Sale Prices by Property Type (Port Moresby and Lae)
| Area / City | Property Type | Indicative Price Range (PGK) |
|---|---|---|
| Touaguba / Paga Hill (Port Moresby) | High-End Residence | 4,000,000 – 8,000,000 |
| Waigani / Hohola (Port Moresby) | Office Building | 3,000,000 – 15,000,000 |
| Boroko / Korobosea (Port Moresby) | 3-Bedroom House | 800,000 – 2,000,000 |
| Gerehu / Hohola (Port Moresby) | “Standard” 3-Bedroom House | 900,000 – 1,500,000 (testimonies) |
| Lae (Eriku / Top Town) | House or Residential Building | 600,000 – 1,500,000 |
| Lae (Industrial Areas) | Warehouse / Industrial Building | 1,200,000 – 3,000,000 |
Observed Monthly Rent Levels (Port Moresby, Aggregated Trends)
| Property Type / Location | Median Monthly Rent (PGK) | Common Range (PGK) |
|---|---|---|
| 1 Bedroom – Downtown | 9,000 – 12,800 | 4,000 – 20,500 |
| 1 Bedroom – Outside Downtown | 2,000 | 1,000 – 3,000 |
| 3 Bedrooms – Downtown | 13,000 – 14,400 | 4,500 – 50,000 |
| 3 Bedrooms – Outside Downtown | 3,000 – 3,500 | 1,500 – 5,500 |
In terms of yields, estimates vary by segment. Some studies highlight low gross yields (around 1.4 to 2.5%) when comparing inflated prices to average rents. Others, particularly in guides for foreign investors, announce much higher levels, ranging from 8 to 12% for premium residential in Port Moresby, up to 18 to 25% and more for staff accommodations in mining or gas project areas. This divergence reflects the duality of the market: on one side, overpriced properties, sometimes acquired for speculation or by companies seeking quick solutions for their employees; on the other, more rational segments where rental yield is actually very high, but often accompanied by stronger operational risks (security, isolation, dependence on a single extraction site).
Amount in kina for which simulations show that an attractive rent can lead to negative cash flow if occupancy is insufficient.
Financing: A Market Dominated by Cash and a Few Targeted Schemes
Another major specificity: the scarcity of real estate financing, especially for private developers and foreign investors. Local banks – Bank South Pacific (BSP), Kina Bank, ANZ, Westpac PNG – offer real estate loans, but conditions are often demanding: interest rates around 8 to 15% per annum, personal contribution of 30 to 50%, solid guarantees. For non-residents, access to local credit is very limited; most international investor transactions are done in cash or via financing obtained abroad, which involves dealing with exchange restrictions and Central Bank approval delays.
The main program is the First Home Ownership Scheme (FHOS), managed by BSP. It offers loans of 200,000 to 400,000 kina at a fixed 4% rate over 40 years, subject to conditions: 10% deposit, stable employment, and primary residence. By late 2019, it had helped about 850 beneficiaries for 1,000 houses. Other options exist (loans at ~6.95% from Kina Bank, advances from retirement funds), but prices still exclude the majority of the population.
Developers face another hurdle: few bank financing programs dedicated to private residential projects, high construction costs due to imported skilled labor and the absence of local materials industries, inflated transaction fees due to legal insecurity and the need for in-depth due diligence. It is not uncommon for more than ten years to pass between the acquisition of virgin land and the sale of residential lots, which increases cash flow needs and vulnerability to economic cycles.
Taxation and Transaction Costs: An Environment to Quantify Carefully
From a tax perspective, real estate investment in Papua New Guinea rests on a few main pillars. First, stamp duty levied on property transfers or lease assignments. The scale is progressive: around 2% for low amounts, then 3, 4, and 5% beyond 140,000 kina. For a foreign investor, a rate of 2% is generally applied for simple transfers, and 1% for lease assignments, but the details should be verified case by case with the Internal Revenue Commission.
Resident companies are taxed at 30% on their rental income, with higher rates for the mining and petroleum sectors. Individuals are subject to a progressive scale that can reach 42%. There is no specific capital gains tax, but repeated sales of real estate can be reclassified as commercial activity, making gains taxable as income.
To this is added an annual land rent paid to the state, generally around 5% of the unimproved land value, a 10% Goods and Services Tax (GST) applicable to commercial leases, and various ancillary fees: legal fees, real estate agency commissions (with a sliding scale of 5% on the first tiers, then 3%, then 5% again on the balance), registration fees – modest in themselves but cumulative –, and costs for topographic surveys and boundary marking.
Transaction costs for a foreign investor are estimated at 5 to 10% of the purchase price, excluding recurring operating costs.
Structural Risks: Land, Security, Governance
Real estate in Papua New Guinea can offer theoretical yields far above those of mature markets, but it also exposes investors to a series of specific risks that studies insist should not be underestimated.
The “compensation mentality” is often mentioned: descendants claim compensation years after legally concluded transactions, on the grounds that their ancestors did not receive a fair price. Customary land is even more exposed, especially when not all clan members have given their explicit consent.
Observers of land issues
Then there is the institutional environment. The country has fallen in some international rankings on the ease of doing business, and bureaucratic heaviness is regularly highlighted. Frequent ministerial turnover, reorganization of land services, and slow processing of files at the Land Board or DLPP can significantly lengthen timelines. In some cases, a simple change in governance within a ministry has led to the review or restart of multiple pending applications.
The security situation in major cities, marked by high crime, inter-tribal violence, and social tensions, makes robust security systems (24/7 guards, electric fences, cameras, access control) standard for properties intended for expatriates or executives, which significantly increases operating expenses.
Finally, the economy’s dependence on commodity cycles creates volatility specific to the real estate market. A major mining project or LNG construction site can suddenly boost demand for quality housing in a given region, driving up rents and values, before a slowdown, a tax dispute, or a change in global prices reverses the trend. Investors betting on a single project or a single geographical sector are thus exposed to a significant risk of vacancy or value decline.
Risk Mitigation Strategies for Investors
Facing these challenges, available analyses converge on several best practices. Upfront, the absolute priority remains due diligence on titles. Any acquisition should be preceded by an exhaustive search of the land register, checks with the DLPP or Registrar of Titles, and, for customary land, in-depth investigations into the history of rights and the composition of the owning clan. Guidance from a Papua New Guinea law firm experienced in foreign investments is considered essential, and international firms have local branches or partnerships for this type of operation.
To protect against fluctuations in the local currency (kina), it is recommended to secure income streams. This can be done, in compliance with exchange regulations, by negotiating rents indexed to the US dollar or billed in foreign currency with expatriate companies. At the same time, diversifying your real estate portfolio both geographically (Port Moresby, Lae, regional centers) and by asset type (residential, offices, warehouses, staff housing) is advised to smooth the impact of economic cycles.
On the operational side, hiring a competent local property manager can make a difference, ensuring a good occupancy rate, regular maintenance, and an effective interface with administrations (permits, taxes, compliance). Investments in basic services – generators, water tanks, access controls – are costly but help secure asset value, especially in neighborhoods where public infrastructure remains deficient.
For large-scale projects, several tools can enhance security: political risk insurance, participation in public-private partnerships (PPP), or aligning with established local players like pension funds (e.g., Nambawan Super), large corporations (e.g., Steamships), or other institutions. These partners bring on-the-ground knowledge and institutional weight.
Urbanization, Social Pressure, and the Role of Affordable Housing
Beyond strictly financial considerations, the housing question in Papua New Guinea has a distinctly social dimension. Studies by the National Research Institute and surveys by portals like Hausples show a clear perception: over 80% of residents consider the residential market “very” or “moderately” unaffordable. At the same time, a significant proportion of households, despite the prices, declare themselves actively searching for a property to buy, often in a range of 200,000 to 400,000 kina, considered locally as the “affordable” threshold.
This is the percentage of tenants attracted to apartments in Port Moresby, according to the survey.
This tension increases pressure on the traditional solidarity system, the “wantok” system. In this model, a family member who manages to become a homeowner is often solicited by many relatives, either for accommodation or financial help. Researchers note that the lack of affordable housing and the scarcity of homeowners among the middle classes amplify this phenomenon, generating frustrations and overcrowding. In this context, broader development of affordable housing – with a wider range of homeowners – could distribute social pressure and alleviate some tensions.
For public authorities, mobilizing land (including customary) for housing and regulating markets to develop intermediate segments are key challenges. Pilot programs on customary land, lease reforms, and the NLDP are responses, but their implementation requires rigorous monitoring.
Infrastructure, Special Economic Zones, and Spillover Effects
Another essential driver of real estate dynamics in Papua New Guinea is the wave of infrastructure programs currently underway. The Connect PNG plan, worth about 5.5 billion US dollars, aims to improve roads, ports, power grids, and basic infrastructure. To this are added large-scale external support, notably from Australia, which funds roads, regional ports, and social projects through various mechanisms (concessional loans, grants, investments via the AIFFP).
Infrastructure investments (roads, ports, industrial zones) change the map of real estate opportunities. They generate growing demand for warehouses, offices, staff housing, hotels, and long-stay residences, particularly around extension and modernization projects like the Lae port, Kavieng port, Sasiva Industrial Park near Motukea port, or the Port Moresby North Port area.
Special Economic Zones, for their part, offer tax incentives (temporary corporate tax exemptions, customs facilities) and can host various real estate projects: offices, shopping centers, hotels, worker housing. A careful investor can thus identify the corridors where public investments are concentrated, and target land acquisitions (subject to secure titles) or construction projects near key future infrastructure.
Towards a Progressive Professionalization of the Sector
Finally, the Papua New Guinea real estate sector, long characterized by a lack of structured data, has seen the emergence in recent years of players contributing to its professionalization. The Hausples portal collects and publishes annual surveys on residential property and has launched a dedicated commercial section. The National Research Institute produces detailed studies on price trends, determinants of rents, and real estate agent behavior. Consultancy firms like PwC assist foreign investors with audit, taxation, and due diligence.
The valuation profession is regulated by the Valuation Act of 1967, which establishes the post of Valuer General, defines professional standards, and makes practitioner registration mandatory. Experienced firms conduct hundreds of thousands of valuations for various assets (residential, mines, infrastructure). The growing expertise of intermediaries, digitization of registers, and new legislative tools (like the future strata title regime) contribute to greater market transparency.
The following table summarizes some structuring features of the market and land system, useful to keep in mind for any investment project.
Summary of Land and Market Characteristics
| Key Element | Situation in Papua New Guinea |
|---|---|
| Share of Customary Land | Approximately 97% of the territory |
| Share of Alienated / State Land | Approximately 3%, concentrated in urban areas and specific projects |
| Foreign Ownership Rights | No freehold ownership; access via state leases (up to 99 years) and sub-leases |
| Investment Authority | Investment Promotion Authority (mandatory certification for foreigners) |
| Main Real Estate Cities | Port Moresby (≈85% of the market), Lae (≈10%), then Hagen, Madang, Kokopo |
| Local Financing | High rates (8–15%), large deposits (30–50%), targeted citizen programs |
| Potential Yields | From 1–3% to over 15–20% depending on segment and area (divergent data) |
| Main Risks | Land insecurity, commodity cycles, security, governance, FX |
Conclusion: A Market of Opportunities Requiring a Specialist Approach
Investing in real estate in Papua New Guinea resembles neither a passive investment in a Western capital, nor a simple diversification in a classic emerging country. It is a frontier market, where impressive gross yields can coexist with heavy operating costs, where the scarcity of formal supply drives up prices but also increases the risk of illiquidity, and where each plot of land relates to a complex history of customary rights, administrative decisions, and local power dynamics.
To succeed, the investor must understand the logic of customary land, identify reliable local partners (law firms, agencies, developers, communities), establish a certified local company with a solid legal structure, and anticipate administrative delays, exchange rate risks, and the cyclical nature of the extractive sector.
In a country where the majority of the urban population still cannot access formal housing, where the demand for structured affordable housing remains immense, and where large infrastructure projects are gradually redrawing economic maps, real estate is not just a financial product. It is also a potential lever for urban and social transformation. Investors who can combine profitability, patience, understanding of the local context, and a willingness to contribute to the supply of decent housing will likely be those who best capitalize, in the long term, on the opportunities offered by Papua New Guinea.
A French business owner, around 50 years old, with a well-structured financial portfolio already in Europe, wanted to diversify part of his capital into residential real estate in Papua New Guinea to obtain rental yield and exposure to the local currency (kina). Allocated budget: 400,000 to 600,000 dollars, without using credit.
After analyzing several areas (Port Moresby, Lae, Kokopo), the chosen strategy was to target a single-family house or a small apartment building in a secure neighborhood of Port Moresby, combining a target gross rental yield of 10% – the higher the yield, the greater the risk – and medium-term appreciation potential, with an all-in cost (acquisition + fees + light renovations) of about 500,000 dollars.
The mission included: market and neighborhood selection, connection with a local network (real estate agent, lawyer, tax specialist, expert in customary land law), choice of the most suitable structure (direct ownership or via a local company), and definition of a diversification plan over time. This type of support allows the investor to benefit from the opportunities in the Papua New Guinea market while controlling legal, land, tax, and rental risks.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
