Papua New Guinea: Where Property Is More Expensive Than Manhattan

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Papua New Guinea: Where Property Is More Expensive Than Manhattan

97 percent of land in Papua New Guinea is held under customary title, leading to sky-high prices for the remaining 3 percent.

Papua New Guinea: Where Property Is More Expensive Than Manhattan

Port Moresby, Papua New Guinea

Credit: U.S. Navy photo by Mass Communication Specialist 3rd Class Joshua Valcarcel

Papua New Guinea is becoming increasingly divided by long-standing tensions relating to the campaign for land reform, alongside soaring rates of land-related violence. Many within the government, development, private, and extractive sectors are strongly advocating for further changes to PNG’s property law system; however, with millions of hectares being signed away for 99-year leases, and increasing protests against mining ventures, communities in PNG are pushing back against attempts to erode their customary title.

PNG has one of the most unusual land law systems in the world. Upon attaining independence in 1975, virtually all land in PNG was placed under customary ownership. It is estimated that some 97 percent of land in Papua New Guinea remains customary land. These figures are relatively unique to Melanesia, with Vanuatu holding approximately 98 percent of its land under customary title, and Fiji holding 90 percent.

Supporters of land reform argue that significant alterations are needed in order to spur growth, attract investors, and facilitate commercial projects. It is extremely difficult to negotiate sales of customary land in PNG, since exchange can only be conducted via collective agreement of all members of the applicable clan. Even if this is achieved, potential buyers must battle a complex and lengthy set of procedural barriers in order to register property, a process which is perpetually subject to the possibility that an excluded clan member may decide to retract the sale.

As such, the value of the tiny amount of alienated land that exists in PNG has skyrocketed. Property prices for non-customary land are exorbitantly high in PNG, with house prices currently hovering around USD$510,000. Office floor rentals and accommodation in Port Moresby are reportedly more expensive than their equivalents in Manhattan, with an average apartment going for a cool $1,300 per week. Many locals find themselves homeless in the city center, with rental prices hopelessly out of reach for persons earning the $45 minimum wage per week. Slum settlements continue to boom on the outskirts of the city, although it is alleged that many of these squatters became the target of a police crackdown in November 2015; once cleared, this “valuable land” could then be auctioned off to the highest-bidding developers.

In a country that has failed to meet any of the Millennium Development Goals, and in an ailing economy desperate to attract foreign liquidity, the need to address the customary title ‘problem’ has become a major priority for the O’Neill administration. Substantial amendments were made in 2012 to the Land Groups Incorporation Act 1974 and the Land Registration Act 1981. These amendments formed part of the government’s bold new National Land Development Program (NDLP), which brought with it a rash of legislative changes to facilitate registration and commercial use of customary land.

Some 5,114,912 hectares have been leased under the new government-issued Special Agricultural and Business Leases (SABLs). Since 1995, 12 percent of the country’s land has been leased under the SABLs. A recent Commission of Inquiry into the SABL system revealed widespread corruption and irregularities, with the 2013 report revealing that out of 42 leases, only four had received landowner consent, whilst the other 38 were “seriously compromised” Although the NDLP’s changes have been branded by some as rash and intemperate, many resent the slow pace of the reform program, which is gradually being phased in from 2011-2030.

Meanwhile, adherents of the customary title system point out that customary tenure remains the backbone and source of livelihood for more than 85 percent of PNG’s rural population. Attachment to land and custom runs deep in PNG, with many indigenous landowners believing that eroding customary tenure for the sake of enhancing rural economic integration is “the antithesis of development.” AidWatch reports that the reform movement is widely interpreted as an externally imposed policy, arguing that “[t]he way in which customary land doesn’t ‘work’ is for foreign investors, including mining companies, the forest industry, and cash crop farming industries, which find it difficult to negotiate consent to exploit the land.”

Whilst its proponents argue that land reform is key to unlocking PNG’s development potential and providing affordable housing, many remain skeptical that it is being used as a tool to remove procedural barriers to using customary land for commercial purposes. Land disputes remain the main source of violence in many of the provinces, and the specter of the bloody Bougainville crisis looms large over the national imagination. Meanwhile, commercial enterprise and squatters alike in PNG seem doomed to struggle for possession of the same 30,000 hectares of alienated land, and the O’Neill government is left with a serious problem on its hands. As a senior PNG Law and Justice staffer remarked, “[L]and use and land mediation will make or break this country.”

Sally Andrews is a New Colombo Plan Scholar and the 2015-2015 New Colombo Plan Indonesia Fellow. She is a Director of the West Papuan Development Company and the 2016 Indo-Pacific Fellow for Young Australians in International Affairs.

This article was first published on the Young Australians in International Affairs blog. It is reprinted with kind permission.