Property prices expected to drop


PRICES for commercial properties are expected to drop next year due to an “oversupply” in the market, according to Real Estate Industry Association president Mike Quinn.
“We appear to be heading towards a significant oversupply of commercial retail and office space in Port Moresby, which without any significant stimulus occurring, is likely to drive prices and values down in 2018, for property in this sector of the market,” Quinn said.
“This is not likely to rebound until 2019 at the earliest.”
Quinn also noted how the ongoing foreign exchange shortage will have a flow-on effect on the market with a drop in demand by firms.
“The other factor that will influence the market in this sector will be the pressure on foreign exchange,” he said.
“Without foreign exchange, traders and manufacturers can’t pay for the stock and raw materials they need. As a result, sales, profitability and demand for space will drop.”
Quinn said an expected slowdown in construction related to large projects had not happened.
He said this while noting how international funding of these projects had caused the lack of information needed to properly plan for the impact on the market.
“Current indications show that the slowdown in construction of industrial and commercial property that should have occured as a result of the completion of the ExxonMobil LNG project and the Pacific Games has not occurred,” Quinn said.
“The significant factor here is that much of the funding for this has not been domestic. And as a result, the checks and balances that usually occur, by that I mean market assessments, review of rental demand, market value appraisal of properties and assessment of demand, has not occurred. This appears to have been largely Chinese-funded.”