Pitfalls to Avoid When Buying Real Estate in Papua New Guinea

Published on January 17, 2026 and written by Cyril Jarnias

Buying real estate in Papua New Guinea can seem enticing, especially in a growing market with high rents in urban centers like Port Moresby or Lae. But behind the attractive listings lies one of the most complex land systems in the world. Without thorough preparation, purchasing a house, land, or building can quickly turn into a legal and financial nightmare.

A Unique and Misunderstood Land System

The first source of error comes from a profound lack of knowledge of Papua New Guinea’s land structure. The country operates on a dual logic: a vast majority of customary lands, governed by clans, and a small portion of so-called “alienated” lands, integrated into a modern legal system based on the land registry and the Torrens system.

Simply put, almost the entire purchase strategy hinges on this fundamental distinction.

Failing to Distinguish “Customary Land” from “Alienated Land”

One of the gravest mistakes is to sign a purchase agreement without knowing if the land is customary, under a State Lease, or freehold. The proportions are stark: approximately 97% of land is held under customary tenure by clans or tribes, and only about 3% is alienated land, formally registered with the title registry.

We can summarize the structure as follows:

Land Type	Estimated Share of Territory	Rightful Owner	Possibility of Direct Purchase
Customary Lands	≈ 90–97 %	Clans, tribes, lineages	No (in principle)
Alienated Lands (State + private)	≈ 3–10 %	State or private individuals	Yes (depending on the regime)
State Lands (State Land)	≈ 3 %	State, via State Leases	Lease, not full ownership
Freehold (very minor)	Small fraction of the 3 %	Citizens or authorized entities	Reserved for citizens

Many new buyers, attracted by seemingly low prices in peripheral areas, wrongly assume that an informal “deed” or a letter signed by an individual is enough to secure ownership. In reality, the outright sale of customary land is, in principle, impossible: these lands can generally only be leased, or leveraged through specific mechanisms like Incorporated Land Groups (ILGs) or special leases.

Underestimating the Weight of Customary Law

The Constitution of Papua New Guinea explicitly protects customary land and strictly regulates its acquisition by the State. Modern land law (Land Act 1996, Land Registration Act 1981, etc.) coexists with living customary rules, which vary from one group to another.

A recurring error is to believe that the signature of a single “chief” or self-proclaimed representative is enough to validate a transaction. In many areas, rights follow clan or sub-clan logic, sometimes matrilineal, with complex inheritance rules. Ignoring these dynamics or assuming an individual agreement is valid for the entire group is laying the groundwork for future conflict.

Trusting the Wrong Person: The Major Risk on Customary Lands

The difficulty in identifying the correct interlocutor is at the heart of many land scandals. There are countless stories of buyers convinced they have found the “true owner”, only to see other clan members emerge, sometimes years later, claiming the land.

Confusing an Individual with the Owning Clan

On customary lands, the notion of an individual owner is often misleading. The real holder of the right remains the clan or tribe, even if use may be allocated to a family or even an individual. A classic mistake is to deal directly with:

This type of “quick” deal is particularly common in urban expansion areas, along major roads, or around mining and industrial projects. Plots of 20m x 20m sold for K800 to K2,000, or hectares transferred for K30,000 to K50,000, attract small buyers. But where the buyer sees an opportunity, the clan may see an illegitimate sale of collective heritage.

Ignoring Incorporated Land Groups (ILGs) and Their Abuses

The law allows clans to form Incorporated Land Groups (ILGs). In theory, this mechanism provides a formal framework: the clan is registered, members are listed, representatives have a mandate to sign leases (e.g., with a mining company). In practice, two mistakes are common.

Dealing with a poorly constituted or contested ILG is practically the same as dealing with an isolated individual: the risks of subsequent challenges remain high.

Believing a State Title is Always Safe: Sometimes Excessive Trust

In most countries using the Torrens system, a registered land title is considered final and incontestable, a principle known as “indefeasibility.” This is also the case for alienated land in Papua New Guinea. But believing that any State Lease is, in practice, immune from challenge is another source of error.

Forgetting the Customary History Behind a State Lease

Some State land originates from the acquisition of customary land, either by agreement or by expropriation for public purposes. However, investigations and disputes have shown that some past acquisitions are contested, poorly documented, or even tainted by irregularities.

A buyer who only focuses on the certificate of title without delving into the land history can thus find themselves caught between statutory law and customary claims.

Not Checking the Lease’s Designated Purpose

Another frequent mistake with State Leases: ignoring that each lease is issued for a specific purpose (residential, commercial, industrial, agricultural, etc.). Converting a residential lease into a workshop or warehouse, or erecting a business on a plot designated for domestic use, constitutes an offense.

Venturing onto Customary Lands Without Legal Security

Tempted by the seemingly low cost and the availability of customary land near major centers, many buyers – including urban Papua New Guineans – make the same mistake: investing in untitled land with precarious documentation.

“Informal” Sales on Urban Fringes

Research conducted, for example, in Taurama Valley (customary land of the Motu Koita), shows how public urban development projects were abandoned after the proliferation of informal sales and rentals by customary landowners to migrant families. In such situations, agreements are often made without clear documents, precise plot demarcation, with staggered and poorly documented payments.

The recurring errors of buyers in these contexts are numerous:

– believing a simple handwritten receipt is sufficient as solid proof of ownership;

– failing to specify the exact area, boundaries, and payment schedule;

– not obtaining the signature of all important clan members;

– forgetting that oral arrangements are interpreted very differently by the parties.

These sales are common because they meet a strong demand for affordable housing. But they incubate medium-term conflicts, especially when land prices rise or when the State plans infrastructure projects.

The “Compensation Mentality” and the Risk of Endless Claims

Real estate professionals and former diplomats cited in the work of the PNG National Research Institute describe an entrenched “compensation mentality”: even when a sale or lease has been concluded in good faith, descendants or distant relatives may return, sometimes years later, to demand new compensation.

This dynamic is not limited to customary land sold directly. It can also target State land or formal leases, as soon as the community feels it was not fairly involved or compensated in the first place. Trying to “buy peace” by accepting successive new payments often ends up encouraging further claims.

Land Governance Expert

For a buyer, underestimating this socio-political factor means ignoring a form of systemic risk specific to the country.

Neglecting Due Diligence: Mistake No. 1, Even on Titled Land

Expert advice converges: the most frequent – and most costly – mistake is to skip or rush the due diligence phase. Too many buyers settle for information provided by the seller, an agent, or a developer, without independent verification.

Not Conducting a Proper Title Search

For alienated lands (State Leases, freehold), the basis of any check is to conduct an official title search with the Registrar of Titles (ROT) within the Department of Lands and Physical Planning (DLPP). This search, which costs money (approx. K100 per title plus copies), allows confirmation of:

– the officially registered owner or holder;

– the exact nature of the right (lease, freehold, remaining term, restrictions);

– the existence of encumbrances: mortgages, liens, registered disputes.

Ignoring Ongoing Disputes and Customary Conflicts

For land with a sensitive history – mining projects, large plantations, disputed areas – a simple title search is not enough. Serious due diligence also involves checking for ongoing legal proceedings or mediation, for example through:

– court registries (National Court, Land Titles Commission, National Lands Commission);

– local authorities in charge of land mediation;

– archives of the Land Disputes Settlement system.

Dispensing with Specialized Legal Advice

Another major mistake is not engaging a local lawyer experienced in land law and investment in Papua New Guinea. The temptation to “save money” by forgoing advice almost always proves very costly.

Specialized national firms (like Posman Kua Aisi or Warner Shand Lawyers) and offices of major international firms (Ashurst, Allens, Gadens, King & Wood Mallesons, etc.) play a key role in:

– analyzing sale or lease contracts;

– verifying compliance with specific laws (Land Act, Foreign Investment Act, etc.);

– ensuring suspensive conditions (obtaining financing, administrative approvals, registration) are properly drafted.

Without this professional filter, buyers often sign unbalanced contracts, without exit clauses in case of title issues or unresolved disputes.

Underestimating Legal Constraints for Foreigners

For non-citizens and foreign companies, the room for maneuver is even narrower – and the risks are higher if the rules are ignored.

Trying to Buy Freehold When It’s Prohibited

The Constitution prohibits non-citizens from holding land in freehold. Yet, misinformed foreigners are sometimes persuaded into dubious schemes to circumvent this prohibition, using nominees or shell companies. At the slightest check, these structures can be challenged, and the investment undermined.

The legal avenues for a foreign investor are essentially:

Any other “trick” promising to circumvent the law is akin to a legal time bomb.

Forgetting the Investment Promotion Authority and Required Permissions

Foreign companies must obtain certification from the Investment Promotion Authority (IPA) and comply with the Investment Promotion Act, which imposes, among other things, investment thresholds and prohibits access to certain sectors reserved for nationals. A frequent mistake is to set up a property purchase or development structure without checking:

– if the intended activity is not reserved;

– if the minimum investment level is met;

– if the annual declarations and reports to the IPA are properly maintained.

These oversights can lead to penalties, or even invalidate certain deeds, including leases or indirect acquisitions.

Miscalculating the Real Costs of a Transaction

Many real estate budgets explode not because of the property’s face price, but because the buyer underestimated peripheral costs: duties, taxes, fees, administrative delays, site security costs.

Focusing on Purchase Price and Forgetting Transfer Duties

In Papua New Guinea, acquiring real estate notably entails:

– payment of stamp duty on the property value, with a progressive scale around 2 to 5 %;

– registration fees with the DLPP, around 0.01 % of the value;

– legal, real estate agent, valuer, and potential notary fees.

Neglecting the Time and Cost of Procedures

Processing times for calculating Stamp Duty, registering the transfer, or processing leases can take several weeks, even months. Delays are frequent due to incomplete files, service backlogs, or contentious files.

Signing an agreement with an unrealistic settlement date, without a suitable clause for administrative slowness, sometimes forces one to renegotiate at the last minute, or pay penalties to the seller.

Mismanaging Payment: Deposits, Security, and Proof

How you pay is as important as the amount. Formal errors – poorly secured deposits, cash payments, lack of proof – open the door to fraud and disputes.

Paying a Deposit Directly to the Seller

In local practice, it is common for the seller to ask for a deposit of about 10% to “take the property off the market.” The problem is not the principle of the deposit, but its management. The frequent mistake is to:

– transfer these funds to the seller’s personal account;

– or pay in cash, without a receipt or with a simple informal paper.

Not Properly Documenting Transfers

For large payments, particularly international ones, it is essential to keep robust proof (SWIFT statements confirmed by the bank, signed statements, etc.). Yet many buyers settle for screenshots or partial bank references.

This slight negligence complicates:

– proving payment in case of dispute;

– tax justification with the Internal Revenue Commission;

– and in some cases, demonstrating the absence of fraud or money laundering.

Skipping Technical Expertise: The Other Major Omission

The land or building may have major defects, regardless of title issues: landslides, soil instability, termites, dangerous electrical installations, problems with access to water or electricity, etc. In a market where basic infrastructure is often inadequate, neglecting the technical inspection of the property is a serious mistake.

Buying Without Independent Structural Inspection

The absence of a formal inspection requirement, as found in other countries, pushes some buyers to rely on a superficial visit. Yet an inspection by a professional (engineer, certified inspector, surveyor) can identify:

Without this examination, hidden refurbishment costs can turn an apparent good deal into a financial black hole.

Ignoring Utility Networks and Access Issues

In Papua New Guinea, connection to water, electricity, sewage, and passable roads is not a given. In peripheral areas, the developer or buyer often has to bear a significant share of these costs. The usual mistakes are to:

– assume public services will be provided “later”;

– neglect the cost of installing generators, water tanks, septic tanks;

– ignore the impact of these elements on insurance, security, and resale value.

Reports show that the lack of infrastructure is a major factor in high housing costs: developers pass on the costs of roads, networks, and basic amenities to buyers.

Miscalculating the “Bankability” of the Title

Another formidable trap is confusing “ownership” with “bank guarantee.” Land may be legally held but not considered acceptable security for a loan by banks.

Confusing Customary Title and Financeable Title

For financial institutions, a “bankable title” is a land right sufficiently secure and clear to serve as collateral. In practice, Papua New Guinean banks:

– more readily accept well-registered State Leases;

– are much more reluctant regarding titles from customary lands, even registered ones, due to dispute risks.

Neglecting Restrictions Noted on the Certificate of Title

Freehold titles resulting from conversions of customary land often contain important restrictions on the back of the certificate of title, such as:

– prohibition on transferring or leasing the property for more than 25 years without going through the Land Board;

– constraints in case of bankruptcy or use as security.

Ignoring these lines in small print can block refinancing, delay a resale, or severely reduce the property’s attractiveness to a future buyer.

Underestimating Administrative Instability and Flaws in the Land Apparatus

Even the most prudent buyer faces a reality: the country’s land administration suffers from structural problems. Not taking this into account in one’s strategy is a mistake in itself.

Believing Registries are Exhaustive and Up-to-Date

Land registries and cadastral maps suffer from:

– gaps in updating;

– damaged, lost, or stolen documents;

– and limited digitization capacity.

Not Anticipating Delays and Inconsistencies

Reports also point out:

– the rarity of Surveyors Board meetings, due to lack of funding;

– quality control issues on plans from public services;

– unsatisfactory filing and registration procedures, especially for surveyors working in the provinces.

For the buyer, not integrating this dimension means:

– underestimating possible delays between signing and effective registration;

– being exposed to plan or demarcation errors not detected in time.

Repeating Criticized Patterns: The Example of SABLs

The recent history of Special Agricultural and Business Leases illustrates what happens when shortcuts are taken with customary lands. These leases, intended to allow clans to lease their land to the State and then recover it as a special lease for agricultural projects, led to the conversion of over 5.2 million hectares of customary land. A commission of inquiry uncovered massive irregularities, involving:

For an individual buyer, finding themselves on land that has gone through this type of mechanism without knowing it is exposing themselves to the legacy of these abuses: disputes, investigations, challenges to leases.

How to Turn These Pitfalls into a Protection Checklist

Faced with this accumulation of risks, some will conclude that buying in Papua New Guinea is simply too dangerous. Studies show, however, that secure transactions are possible, provided one does not repeat the recurring mistakes.

Without providing a complete “how-to” list, we can translate the main lessons into essential reflexes.

Always Start with the Nature of the Land

Before any price or payment discussion, the first question must be: is the land customary or alienated? If alienated, what type of right (State Lease, freehold, other) and what are its restrictions? If customary, is there an ILG and how is it constituted?

This starting point determines everything else: interlocutors, procedures, duration, risk level.

Never Settle for Documents Provided by the Seller

Whether it’s titles, boundary plans, letters of consent, or receipts, every document must be verified with the official source: Registrar of Titles, DLPP, Land Titles Commission, courts, etc. A shiny photocopy is worthless without this check.

Treat Due Diligence as an Investment, Not a Cost

Legal, cadastral, and technical expertise should be seen as the core of the project, not as an optional extra. In an environment where 97% of land remains customary and infrastructure is uneven, this preliminary work makes the difference between a solid acquisition and a future litigation file.

Adjust Financing and Resale Expectations

The specificities of title “bankability” and the scarcity of mortgage financing for certain land categories must be integrated from the outset. Buying while imagining you can easily refinance a semi-titled customary plot in two years, or resell it to a buyer dependent on a bank loan, is an unrealistic projection.

Conclusion: Buying in Papua New Guinea is First About Learning to Say No

In a market described as largely unregulated, where demographic pressure and the symbolic value of land are very strong, knowing how to refuse a “good deal” that is poorly put together is often the best investment act.

Most of the mistakes noted in research – confusion over land nature, excessive trust in an isolated interlocutor, rushed due diligence, ignorance of rules for foreigners, imprudent payments, neglect of technical and administrative constraints – have one thing in common: haste.

Buying real estate in Papua New Guinea is not impossible. It’s simply an exercise that does not forgive approximation. In this country where land remains the foundation of identity, the buyer’s best protection starts with scrupulous respect for this reality.