Current Real Estate Market Trends in Papua New Guinea

Published on January 17, 2026 and written by Cyril Jarnias

Long on the sidelines of major investment flows, Papua New Guinea is now establishing itself as one of the last “frontier markets” in the Asia-Pacific. Behind this label lies a real estate landscape that is both promising and perplexing: rapid growth, high rental yields, a chronic shortage of affordable housing, the overwhelming influence of major mining and gas projects, not to mention a land tenure system that is almost entirely customary. Understanding current trends therefore requires looking simultaneously at the economy, land law, household preferences, the rise of digital tools, and the country’s structural limitations.

A Booming Market in a Constrained Economy

Papua New Guinea is experiencing notable real estate growth, driven by an economy still heavily dependent on natural resources. Gross domestic product reaches US$27.9 billion, with growth forecast between 3 and 4.5% per year until 2028. Inflation remains high, around 6.9%, but is stabilizing, and the S&P sovereign rating is B with a stable outlook. In this context, the real estate market is developing rapidly, even if its foundation remains fragile.

Demographics amplify the pressure: the population is approximately 9.4 million, but only 13% live in urban areas. In other words, the potential for rural migration to cities is immense, and any acceleration in urbanization translates into a demand shock for housing in Port Moresby, Lae, or emerging regional centers.

A Strongly Cyclical Market, Driven by Resource Projects

Papua New Guinea’s real estate market closely follows the cycles of mega-projects linked to gas and mining. The PNG LNG project is emblematic. Between 2010 and 2015, during the construction phase, property prices jumped by 15 to 20% per year, amid scarce supply and an influx of workers. Residential rents literally doubled between 2008 and 2012 in Port Moresby.

Since 2023, the market has entered a recovery phase, driven by new resource projects and macroeconomic stabilization. Annual residential price increases are around 5 to 8%. However, this recovery remains very uneven across segments: relative oversupply at the high end, persistent shortage in the mid and low-end segments.

These recent cycles can be summarized synthetically.

Period	Economic Context	Annual Price Change	Main Characteristic
2010–2015	PNG LNG Boom (construction)	+15 to +20%	Supply shortage, rent explosion
2015–2019	Post-boom adjustment	–2 to +3%	High-end corrections
2020–2022	Covid shock, expatriate retreat	–5 to 0%	Decline in international demand
2023–present	Recovery and new projects	+5 to +8%	Return to growth, still selective

This strong correlation with extractive projects creates a highly volatile market. During each boom phase, demand explodes faster than supply can be structured, and when the economic situation reverses, price adjustments remain insufficient to make housing truly affordable for the majority of households.

A Unique Land Tenure Framework: 97% Customary Land

One of the most defining specificities of the real estate market in Papua New Guinea is the land tenure structure. Approximately 97% of the territory consists of customary land held by clans or tribes, managed according to traditional rules and rarely registered in the national cadastre. Only 3% of land is “alienated,” meaning titled, mostly located in urban areas or on former plantations.

This configuration has profound consequences:

– access to secure land is extremely limited for developers,

– transactions are often lengthy and complex, especially when customary rights need to be clarified,

– securing investments is an obstacle course of legal and political challenges.

Access Avenues for Foreign Investors

Non-citizen investors cannot own land in freehold. They rely on a range of regulated mechanisms:

– State Leases: the state grants a long-term lease on titled land.

– Sub‑Leases: a national holder of a state lease then grants a sub‑lease to a foreign investor.

– Business Leases on Customary Land: require agreement with local rightsholders, often through entities like “Incorporated Land Groups” (ILGs).

– Former SABLs (Special Agricultural and Business Leases): highly controversial, these provisions are subject to revisions and inquiries.

Attempts to Mobilize Customary Land

Aware that the narrowness of the titled land market hampers urbanization and development, public authorities are multiplying initiatives. Under Prime Minister James Marape’s leadership, the emphasis is on “mobilizing” customary land for investment, notably through:

– the National Land Development Program (NLDP), which seeks to frame the creation of incorporated customary landowner groups and the voluntary registration of plots,

– a pilot project launched in 2020 in the Napa Napa area (Port Moresby) using the Land Act to transform customary plots into state leases, which can then be developed,

– the use of Urban Development Lease (UDL) schemes, where landowners lease their land to the state, which handles urban planning before redistribution.

These instruments, however, are progressing slowly. Meanwhile, urban expansion occurs de facto via informal settlements on customary or state land, constituting a “parallel real estate market” that mirrors the formal sector.

Urbanization, Strained Cities, and Market Geography

The heart of real estate activity is concentrated in a few hubs: the capital Port Moresby, Lae, and then a series of regional towns like Madang, Mount Hagen, Kokopo, Wewak, Goroka, or Alotau. Urbanization there is rapid, often faster than the extension of water, electricity, road, or sanitation networks.

Port Moresby, a Laboratory of Contrasts

Port Moresby concentrates the main administrative and economic headquarters, and thus the bulk of high-end rental demand, particularly for secure properties intended for expatriates, private sector executives, and senior officials. It features a mosaic of highly contrasting neighborhoods.

For buyers and tenants, certain areas stand out particularly:

Area / Neighborhood (Port Moresby)	Dominant Profile	Main Assets
Paga Hill / Touaguba	Premium residential	Views, security, expatriate and high-end clientele
Waigani	Mixed (residential / administrative)	Proximity to ministries, shopping centers
Boroko / Korobosea	Mid-range residential	Good access, services, commerce
Gerehu, 8‑Mile, 9‑Mile	Expanding periphery	Lower land cost, new subdivisions
Town (downtown)	Business and upscale residential	CBD, strong rental demand, high prices and rents

Recent data illustrates the extent of rental market pressure. For a one-bedroom apartment downtown, monthly rents range from 4,000 to over 20,000 kina, and for a three-bedroom, they can go up to 50,000 kina per month in the most sought-after buildings. These levels are completely disconnected from local median incomes.

Lae: Industrial Hub and Space Shortage

The country’s second largest urban area, Lae plays the role of a commercial and industrial platform, with a major port and a significant manufacturing base (agribusiness, processing, logistics). Here too, demand for commercial and industrial real estate is very strong, but supply suffers from a glaring lack of developable land. Industrial zones have high occupancy rates, favoring rehabilitation or densification projects rather than horizontal expansion.

Prices reflect this positioning:

City / Segment	Indicative Price Range (PGK)
Port Moresby – 3-bed house Korobosea/Boroko	800,000 – 2,000,000
Lae – residential Eriku / Top Town	600,000 – 1,500,000
Lae – warehouse / industrial	1,200,000 – 3,000,000

In residential, new supply remains modest compared to Port Moresby. The city’s growth materializes mainly through the expansion of informal settlements on unstable or flood-prone land, fueled by rural exodus.

Regional Towns and Secondary Markets

Beyond these two major hubs, towns like Madang, Mount Hagen, or Kokopo are seeing a multiplication of investments, often targeted at tourism, commerce, or regional logistics. Entry prices there are 30 to 50% lower than in Port Moresby for properties of comparable size, attracting some investors seeking higher gross yields.

Housing: Massive Demand, Mismatched Supply, and an Affordability Crisis

The most striking feature of the residential market in Papua New Guinea is the disconnect between built supply and population needs. On one side, developments for the high and mid-range, secure apartments, compounds for employees of large companies and expatriates, which feature rental and sale prices defying local standards. On the other, a popular demand dominated by households with limited income, often in overcrowded conditions, with no access to formal ownership or quality rental products.

Surveys in recent years are unequivocal: about 80% of respondents consider the market “unaffordable.” More than half even find prices “extremely” unaffordable. International indices confirm this diagnosis, with a housing price-to-income ratio exceeding 130 in the capital, and even over 300 according to some recent databases, coupled with a near-zero credit accessibility index.

Household Profiles and Housing Preferences

Household structure worsens the tension. Papua New Guinea is characterized by large households: approximately 40% of households have between four and six people, and two-thirds have six or more. Over 16% of households shelter ten people or more. In this context, demand focuses mostly on three or four-bedroom houses, on plots between 300 and 500 square meters.

They paint a fairly precise picture.

Preference surveys

Desired Feature	Estimated Share of Respondents
“High-set” houses (elevated)	~42 %
“Low-set” houses (single-level)	~16 %
Apartments (for purchase)	~4 %
Three or four bedrooms	~85 %
Plot of 300 to 500 m²	Strong majority

Traditional wooden houses still represent about 22% of the housing stock, but constructions in brick or concrete and light steel frames now each account for about one-third of homes, a sign of a gradual modernization of materials. Growing interest is also observed in kit or prefabricated houses, which respond to cost and logistics constraints on difficult terrain.

A Widening Price-Income Gap

2019 surveys showed that nearly a quarter of potential buyers were willing to pay up to 200,000 kina for a home, 37% targeted the 200,000–400,000 bracket, 18% were between 400,000 and 500,000, and 21% above 500,000 kina. However, on the ground, even in neighborhoods considered “average,” prices often far exceed these ranges. In Gerehu, for example, the price of a house could range from 350,000 to 1 million kina, while in the capital’s more established neighborhoods, prices regularly exceed one million kina.

The main financial parameters for a first-time buyer are as follows.

Financing Element	Indicative Value
Share of buyers using a loan	> 80 %
Subsidized BSP interest rate (FHO Scheme)	4% over 40 years (up to 400,000 PGK)
Kina Bank offer	Rate around 6.95% over 30 years
Typical deposit paid by borrowers	10 to 20% for the majority
Average interest rate 20-year loan (excluding subsidies)	Approximately 12–13% according to some series

Even with these conditions, the burden of repayment remains overwhelming relative to wages, especially when other expenses (energy, transport, food) are included. The consequence is visible in tenure figures: barely one-fifth of households fully own their home, about 9% are repaying a loan, and nearly 70% are tenants.

Informal: A De Facto Rental Market

Faced with this shortage of accessible supply, a vast informal rental market has formed in the precarious neighborhoods of Port Moresby and Lae. Academic studies have shown that nearly half the population of these cities now lives in informal settlements, whether on public or customary land. Rents there are incomparably lower – the median monthly rent observed in the mid-2010s was around 700 kina – for housing that is most often rudimentary, built from salvaged materials or local wood, and lacking essential services.

The paradox, noted by researchers, is that rents do not clearly reflect the type or condition of the housing: the absence of regulation, low transparency, and overall land scarcity sustain highly heterogeneous practices. Hence the recurrent call from some experts to gradually formalize part of this informal stock, in order to transform this “dead capital” into valuable assets, while improving living conditions.

Rental Market and Yields: High but Highly Contrasted Rates

Viewed from abroad, Papua New Guinea’s real estate market intrigues with its reported yields, which seem significantly higher than those of many developed economies. Considering the overall market, general estimates speak of gross yields of 1.4 to 2.5%, but this figure masks extreme diversity depending on property type and location.

For institutional investors or developers, the figures by segment are much more telling.

Market Segment	Expected Gross Rental Yield (approx.)
Premium residential (Port Moresby)	8 – 12 %
Mid-range residential	10 – 15 %
Office (commercial buildings)	12 – 18 %
Retail spaces	10 – 16 %
Warehouses and industrial	11 – 16 %
Staff housing compounds	15 – 20 %
Accommodation in mining project zones	18 – 25 % and above

These levels first reflect a significant risk premium: relative political instability, heavy dependence on international resource prices, infrastructure deficit, land tenure uncertainties, weak regulatory framework. They also stem from the fact that certain niches – notably housing for workers on extractive projects, or staff villages in remote areas – are virtually monopolized during peak demand periods.

Commercial Real Estate: Offices, Retail, Logistics in Full Development

The commercial segment follows a trajectory parallel to that of high-end residential, but with its own drivers: expansion of financial services, growth in telecommunications, development of the energy sector, rise in business tourism. In major cities, the urban landscape is transforming: new office towers, shopping malls, hotels, modern warehouses.

This dynamic is also fueled by public policies such as PPPs (public-private partnerships) and the creation of Special Economic Zones (SEZs), which often offer tax and customs incentives. These mechanisms are designed to attract investors into local resource processing, services, logistics, or hospitality.

Public Policy: Between Proactivity and Sluggish Implementation

Authorities have multiplied programs aimed at widening access to housing, reducing land costs, and modernizing title management. The National Affordable Lands and Housing Program, launched in 2013, aimed to lay the foundations for an affordable housing policy by stimulating the production of serviced land and reduced-cost housing. Results still fall far short of expressed needs, but the goal remains officially central.

More recently, efforts focus on three axes:

Recommendations from official studies or local think tanks often converge: there is a need to better regulate real estate agent practices (licensing, disclosure obligations on size, age, condition of properties), establish a more robust consumer protection regime, and reorganize the supply chain for urbanized land to make it more efficient.

Digitalization, Data, and New Tools

Papua New Guinea’s market remains largely informal and lightly regulated, but it is gradually digitalizing. The Hausples.com.pg platform, created in 2013, plays a central role by aggregating thousands of listings, organizing well-attended property shows (over 10,000 visitors at some recent events), and producing annual surveys on household perceptions and intentions.

The platform is also developing innovative services:

– virtual tours,

– detailed mapping of listings,

– neighborhood popularity indicators,

– analysis of sale price and rent trends.

These tools are starting to reduce the information asymmetry that has characterized the market until now, where professionals could practice non-transparent pricing policies, as several research papers have shown.

Towards “Greener” Real Estate: First Steps in the Transition

In a territory so rich in biodiversity, environmental issues are occupying an increasingly important place. Without yet being the main driver of investments, sustainable construction practices are gradually taking hold. We thus observe:

Companies like PNG Forest Products illustrate this direction by combining production of certified engineered wood, prefabricated housing systems, and self-generation of green electricity via hydroelectric plants. Meanwhile, the state has set ambitious goals for renewable electricity access, with the aim of reaching 70% coverage via renewable sources in the medium term, and universal access in the longer term.

Even if these developments remain embryonic at this stage relative to the overall housing stock, they signal a growing awareness: future urban growth cannot indefinitely reproduce current patterns of resource consumption and emissions.

Structural Risks and Future Challenges

Behind the attractive yield prospects, Papua New Guinea remains a high-risk market for developers and investors. Several factors combine:

– Insufficient infrastructure: degraded roads, incomplete water and sanitation networks, irregular electricity supply limit the valuation of many plots.

– Land access: scarcity of titled land, complexity of negotiations on customary land, very lengthy registration procedures (sometimes up to a year between offer and effective transfer).

– High construction costs: dependence on imported materials, lack of local skilled labor, costly reliance on foreign experts.

– Security risks and sometimes unfavorable international perception, which weigh on attractiveness for some investor groups.

– Resource dependence: every downturn in gas or mineral prices impacts real estate demand, leading to both temporary oversupply in some segments and price volatility.

To these economic challenges are added governance issues: corruption is still considered a major impediment, frequent changes in political leadership disrupt the continuity of reforms, and coordination between public agencies involved in urban planning, land, infrastructure, and housing remains insufficient.

Conclusion: A Frontier Market Between Opportunities and Imbalances

The current trends of the real estate market in Papua New Guinea must therefore be read on several levels. At the macro level, the country is in a recovery phase after a very pronounced boom-bust cycle, with solid growth prospects and growing investor interest in a still underdeveloped market. At the city level, demand is exploding under the effect of urbanization, the rise of a middle class, and the establishment of new services, but supply remains constrained by the land tenure straitjacket, construction costs, and insufficient infrastructure.

For investors, potential yields are real, particularly in certain segments like staff housing, modern offices, or assets linked to resource projects. But they come with a high risk premium, whether in terms of land tenure security, macroeconomic volatility, or operational constraints.

The future of this market will depend largely on the country’s ability to adapt to new technologies and respond to the growing expectations of consumers.

– accelerate land reform and the controlled opening of customary land to development,

– strengthen urban infrastructure,

– structure a more transparent regulatory framework for transactions and the real estate profession,

– and more systematically integrate affordable and sustainable housing solutions into its growth strategies.

In this perspective, Papua New Guinea remains a singular laboratory: that of a real estate market where, sometimes brutally, the global dynamics of the extractive industry, the constraints of a customary land system, the aspirations of a rapidly changing urban population, and the first experiments of a greener, better-regulated city intersect.