Rent explosion expected

 By SHIRLEY MAULUDU

THE development of liquefied natural gas (LNG) project is expected to trigger further rate rises on expatriate accommodation in Port Moresby and elsewhere in the country. 

This was the observation from Century 21 Siule Real Estate as PNG looked forward to the first export from the US$19 billion (K46 billion) LNG project and with the development  of the second gas facility in Gulf in full swing.

This would result in high cost of accommodation in the city, sales and marketing manager Chris Arek said.

“As we have just experienced with the first LNG, if expatriates are to be housed in Port Moresby, the demand, and therefore rental rates for high-end properties, will increase. 

“This effect could spread to the rest of the market when existing tenants are forced out of their current locations to find more affordable options.” 

However, Arek said the demand for accommodation was good, although it would still depend on the rates charged to clients.

He said for high-end properties, demand was flat. 

“But for mid-range up to K4,500 per week demand is still strong while for the low-end market up to K1,800 per week, the demand would always be there.

“But Century 21 makes it a point not to market or advertise properties whose rates we believe to be unrealistic given the quality standard of the property.”

Arek said the real estate industry was not regulated. 

Market forces of supply and demand determined rental rates with strong influence from landlords, he said.

International Housing Concept Ltd in PNG chairman Sig Nordal had agreed that the cost of renting a house in the country with Port Moresby, in particular, was high in relation to people’s earnings.    

“But the rental cost would level off as more houses are built.  

“This is typical under any supply and demand equation.

Nordal, however, said it obviously hurt the working class who rented their houses.

In some cases where companies or the government provided accommodation to its staff, this scheme tends to drive up the cost of housing.

Arek said: “More land need to be freed up for development to create large housing estates for ordinary PNG worke.”

He said most of the locals did not own their homes.