OXFORD BUSINESS GROUP | Extracts
AFTER SEVERAL YEARS of rapid growth in Port Moresby?s residential real estate sector, the market is in consolidating.
Government data show that the finance, real estate and business services sector grew by 10% in 2012, down from 20% the previous year. In 2013 expansion is projected to be just 1.5% according to the Department of Treasury.
Another indicator of a slow-down in the residential market is a decline in the rate of growth for home loans, which fell from 150% for the year ended March 2012 to 41% for the year ended September 2012, according to the World Bank.
While this is still fast-paced expansion, caution among lenders is rising. Equity demands for loan approval have reportedly risen from 10% in 2009 to more than 30% in 2013.
Throughout the market there is a retreat from residential investment. Focus has instead begun to shift toward the commercial and retail sectors, which are expected to retain their momentum.
Demand for retail properties is growing as incomes rise and urbanisation continues, loosening the informal market?s hold on the economy.
?Retail shopping centres could be another area of interest,? said Andrew Esler, acting managing director of Nambawan Super, one of PNG?s largest pension funds.
?There has been activity in this asset class lately with three new supermarkets in Port Moresby. As customer demand matures and shopping expectations rise, there may be more opportunities in this segment.?
Looking ahead, developers are expected to focus on smaller projects in both the retail and commercial segments.
Nambawan Super?s 9,900-sq-metre OPH Tower is the largest tower under construction today, far smaller than the already completed 14,000-sq-metre Deloitte Tower and the 15-storey Pacific Place.
Other developers, such as Pacific Palms Property and CB Builders, are working on projects that will lease office space to tenants looking for less than 200 sq metres.
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