RICHARD SAPIAS of Consap Developers
NASFUND has been very successful to date with its property development programme due to being able to quickly read the signals in 2006-2007 and push aggressively for development.
Similarly we chose smart locations to commence development at (Harbour City and Konedobu) as well as aggressively land bank for long-term projects.
While we have led the pack on construction as well as land banking for long-term needs, the signals very clearly tell us that supply of commercial space is rapidly catching up to demand.
Similarly while none of us can estimate what flow on space is required from the LNG project, we do know that evidence to date suggests that new construction in desirable locales is really about cannibalising tenants from older buildings as it is about new entrants or existing businesses looking for bigger space.
By March 31, 2010, Nasfund will have completed its current commercial construction programme in Port Moresby in line with our rolling five-year plan as 2009 being a year of consolidation.
Our programme has been successful with what appears to be 100% take up on all constructions with “blue chip” tenants.
This augurs well because even if the market for commercial space softens, the quality of tenant combined with our premier locations mean that double digit income streams still flow through to the fund.
Knowing what we know about the current state of the market, we cannot continue on at the same pace and adopt the same methodology towards construction of more commercial space as we have done previously.
Any large-scale development will require pre-leasing or pre-commitment.
It is no longer a case of “build it and they will come” but more “we will build it when you decide to come”.
This we believe is a disciplined approach in a market that is drawing quickly to an end.