Saturday, August 3, 2013

RESOURCE SECTOR GROWTH DRIVES UP RENTALS IN LAE

Mus Palang
Five years ago,  Mus Palang an electrician  and a real estate developer  built a set  of units  in  Nawae Block – an area  plagued with  a high rate of drug and alcohol abuse.
            Today all his units are fully tenanted mostly by   middle income earners  seeking relief from  the  soaring rentals in the  more preferable locations in  Lae City.  
            “The prices are too high. And that’s what drives people into the outer suburbs and settlements.”
            Mus  is one of many  small businessmen and women  who have taken advantage of   the ever  increasing demand for affordable housing and security.  His  one and two bedroom units are occupied by families of  public servants  in middle management  and  private sector workers whose employers  pay meager housing allowances.
            But many more families live in  shabby, unregulated, privately built  bedsitter units.   Not all have the basics of water, power and sewerage  services provided by the  city  council.   
Mus says the government needs regulate real estate prices  and  offer some relief to struggling families.  
            But it is a view that is not shared by the Real Estate Agents Association, President, Mike Quinn, who says the industry   cannot and should not be regulated.
            “It is an industry that depends on supply and demand,”  he says.
Units at Nawae Block
            Much of the real estate industry growth,  in the last 10 years, has been driven by the resource  sector.    However, in the last five years,  that growth – in Lae at least -  has plateaued  with  the end of the construction phase in the LNG project in Hela Province.  Low gold prices in the last  nine months has also set a major mining project in the Wau-Bulolo area back by at least two years.
            But Mike Quinn sees  good days ahead. In two years, the Wafi-Golpu project  owned and operated by  Morobe Mining Joint venture (MMJV) is expected to begin operation and with it will come a renewed demand for quality  housing.
            Quinn sees government intervention happening  in other areas of the housing sector.   He says the government has the capital  to  develop large scale housing projects in  areas  that  are currently unfeasible for privately owned real estate companies.
            “Those are the kind of areas that the National Housing Corporation should be taking the lead is developing  housing projects.”
The National Housing Corporation (NHC) – the government agency tasked to  provide affordable housing to Papua New Guineans – has not  been doing a good  job in the past.   It has fended off ongoing allegations of corruption and its executives have  faced the Parliamentary  Public Accounts Committee  during  investigations.
Since taking office, the  new  Housing Minister, Paul Isikiel,  has pushed for internal reforms.  One of the things he wants to do is sell off  NHC  properties  in Lae to the  Morobe Provincial Government  in a move expected to ease the  public servant housing shortage.

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