The growth of Papua New Guinea’s destitute economy is giving major developers the confidence to invest in projects outside of Port Moresby, said a panel of experts at the recent Business Advantage Papua New Guinea Investment Conference.
While many in Papua New Guinea’s corporate sector are looking forward to the next wave of resource investment, some major long-term investors take a different view.
‘For Steamships, all of our strategic planning is based on no new resource projects taking place. As a country, we focus on LNG and mining projects, but when us we do our planning, we assume none of them are going to go ahead,’ Rupert Bray, CEO of Steamships Trading Company, said in a panel discussion at the 2022 Business Advantage Papua New Guinea Investment Conference.
“We depend on the growth of the underlying economy. the non-extractive [part of the economy] it is growing at three percent, so we need political stability for that and we need to take a longer-term view.”
Steamships has a busy future investment plan. It is looking to develop Portside Business Park on a 40-acre site adjacent to Port Moresby Harbor in Motukea, build a 40,000-square-meter integrated mixed development on Mt Hagen, and redevelop the Melanesian Hotel in Lae.
Also completing Harborside South, the K250 million addition to its Harborside Precinct, with 21 levels of residential, retail and commercial spaces, including the newly announced Marriott Executive Apartments Port Moresby (the first time the US-owned hotel chain, the most largest in the world – has had a presence in PNG).
PNG’s largest superannuation fund, Nambawan Super, is another major property developer, recently completing the Rangeview Heights development in Port Moresby and building a new head office in Waigani.
Executive Director Paul Sayer said projects like Harborside revitalize brownfields, inspiring others to take on big projects. He believes that these mixed-use projects allow developers to hedge against simply relying on the resource sector.
‘For the first time since I’ve lived here, the investment climate gives us the confidence to invest not just in Port Moresby and not just in resource-based industries.’
‘We want the whole economy to get up. We are looking at how the rest of the economy comes together and where it makes sense to put those buildings so it can flow and make Port Moresby a better city,” Sayer said.
For the Nambawan Super executive, another key issue is how to attract other big players to invest in this area. ‘Some of these investments are K500 million, so who is going to buy that from us?’ he asked him. ‘How can we make it a better environment to do than others [international] people invest?
One solution is the creation in PNG of listed property trusts as investment vehicles.
The future of regional projects
Another key change in the large-scale project space is that Port Moresby is no longer the only place for large investments, showing a maturing of the regional areas.
“We have just under a billion kina worth of projects in the investment pipeline and three-quarters of that is outside of Port Moresby,” Bray said, adding that most were mixed-use projects.
‘For the first time since I’ve lived here, the investment climate gives us the confidence to invest not only in Port Moresby and not only in resource-based industries, but in the underlying economy in the other cities.’
Like Nambawan Super and Steamships, the Lamana Group of Companies is a member of the recently established Real Estate Developers Association. George Constantinou, CEO of Monier and General Manager of Hebou Constructions in Lamana, noted that recent success on large-scale projects is helping to increase PNG’s skills base.
“It’s very important to deliver quality and that’s what a lot of our business is about,” Constantinou said. ‘We always try to develop local content and skills because the nationals will be there forever. But we [also] recognize that there has to be a transmission of knowledge and skill sets, so we import particular skills.’
The construction chief says there are some key challenges around post-COVID supply chains that require a lot of planning.
“If it’s a critical item and it’s going to delay the project in any way shape or form, what we’ve done in the past is get as much of that item as possible early on because if you don’t have it arriving on time, on site, will drive the whole project,’ he said.