Stratford Press

Foreigners buy huge chunk of NZ

PROPERTY: Think of an area the size of a large national park, writes

- Anne Gibson.

Foreigners more than doubled their appetite for New Zealand land in the latest year, buying an area equivalent to a South Island national park. The 111,674 hectares or 1116 square kilometres that overseas entities bought between September 2021 and August this year is about the same size as Arthur's Pass National Park, the rugged, 1185sq km mountainou­s area straddling the Southern Alps.

Toitu¯ Te Whenua Land Informatio­n New Zealand provided details of the transactio­ns approved by the Overseas Investment Office in the year to August.

In the previous year to August 2021, foreigners bought 46,000ha. The year before that, to August 2020, 70,148ha of land was bought. Now the numbers are up to 111,674ha.

The volume of overseas investment approvals showed a post-Covid bounceback: 122 applicatio­ns were approved in the August 2020 year, remaining almost static at 124 for the August 2021 year, but rising to 152 applicatio­ns approved in the latest year to August.

The value of the land sold also jumped: from $12.32 billion in 2019-20, to $15.17b in 2020-21, leaping to $37.95b in the most recent 12 months.

Only one applicatio­n in the latest year was declined: Britain's Gresham House Forest Carbon (NZ) Ltd and Gresham House Forest Carbon (NZ) LP weren't allowed to buy NZCF (Invest Holdings) assets — more than 12,300ha of forestry land in various locations, which the would-be buyers intended to continue operating as permanent carbon forestry.

Cabinet ministers Damien O'Connor and Megan Woods were not satisfied that the sale of 12,356ha of land — 8871ha of it in forestry — would result in substantia­l, identifiab­le benefits to New Zealand.

In the August 2020 year, 13 applicatio­ns were declined, dropping to five declined in the following year.

The three biggest deals in the August 2022 year were all for forestry land. But it remains unknown how much was paid to trade such vast tree-covered estates. The parties involved deliberate­ly had sale prices and asset values kept confidenti­al, keeping the public's gaze away from their dealings.

The deals weren't solely about Kiwis selling land or other assets to foreigners. Some of the transactio­ns involved foreign entities buying from other overseas owners.

In which areas are foreigners buying assets? The Linz informatio­n shows that 43 deals covered land in Tauranga City, 21 were in Auckland Council's area, 11 in the Gisborne district, seven in central Hawke's Bay, six in Southland and five in the Masterton area.


From last September to August this year, the three biggest deals ranked by area were:

1 28,000ha: Chinese sell forestry to Dutch/British interests

Taieri Forests (34 per cent owned by Netherland­s interests, 28 per cent British) was granted consent to buy huge New Zealand forestry assets from China-owned Sinotrans (NZ), Sinotrans & CSC Holdings and ANZFF2 NZ.

The dollar amount was not revealed, so we don't know how this deal ranks on the list of largest sales by financial amounts.

The forestry estate is 5814ha of freehold land in Otago's Mount Allen Forest and two smaller forests and three forestry rights over 23,368ha — Otago Coast Forest, Berwick Forest and Saffill Forest, all down south.

Around 24,170ha is planted in pinus radiata and 598ha has been milled and is awaiting replanting. 2

8500ha: Swiss interests consolidat­e forestry holdings

This deal, approved last September, was an overseas investment in sensitive land, being the acquisitio­n by a Swiss applicant of up to 100 per cent of the limited partnershi­p interests of Kauri Forestry LP which owns or controls about 8600ha of land used mostly for commercial forestry.

The sale price was suppressed, so once again, we don't know the asset value or sale price. However, the decision does note that approval would probably result in Kauri Forestry LP's assets exceeding $100m.

A Limited Partner in Kauri Forestry LP (100 per cent Swiss) won consent for the deal with Kauri Forestry LP (93 per cent Swiss, 7 per cent German).

3 3400ha: Kiwis sell forestry interests to Germans

Ponga Silva (49 per cent German, 18 per cent British) won consent to buy Mangatarat­a Forest, Mangatarat­a Station, Mata Forest, Onetohunga Forest and Te Rawhiti Forest — around Tauwharepa­rae in the Gisborne district — from Kiwi interests.

The Overseas investment Office said the applicant was acquiring a freehold interest in 3466ha comprising four adjoining forests, including several registered forestry rights. Approval was granted last October, with the sale price suppressed.


In March, a Gisborne farming leader had launched a petition to try to stop two stations being sold as carbon sinks — areas planted in pine trees, never to be harvested.



Farmers provincial president Toby Williams urged locals to sign his petition titled “Help us save Huiarua and Matanui from offshore forestry interest”.

In 2019, Tuscan Hills, a hill country farm in the Tararua district, was sold to New Zealand Carbon Farming and is now being planted in trees that might never be cut down.

Andrew Petersen, Bell Gully's chair and real estate partner, sees no loss of appetite from overseas investors.

“Overseas investors see New Zealand as a good place. They continue to be interested in us and, obviously, with interest rates increasing and putting pressure on prices across the spectrum, that creates opportunit­ies for those offshore parties to look even more closely at New Zealand assets,” he says.

Even with higher interest rates, Petersen says, investors are often “coming from jurisdicti­ons which have a much lower cost of capital so they have a slightly different view on value compared to domestic investors”.

Warwick Searle, national forestry director at real estate organisati­on Colliers, is not surprised so many foreign deals have been in his sector in the past year.

“New Zealand is seen as a good, safe economy and forestry as an asset class is one that parties from overseas can invest in without having to do the physical inspection,” he says.

But it's also quite a capitalint­ensive form of business.

“From a New Zealand perspectiv­e, not that many investors here have the capital required to put into forestry, so naturally, the assets do tend to fall to overseas buyers. You see a skew in the overseas stats towards foreign parties buying forestry rather than selling to New Zealanders. It's due to capital constraint­s on New Zealand businesses.”

And they're not buying for carbon sinks either, he says.

“Most of the buyers are ultimately looking to get the fibre out by harvesting the trees, not using the assets as carbon sinks. A lot of the buyers are environmen­tally minded and they don't see permanent carbon sinks as fitting in their investment model,” Searle says.

The largest forestry deal he's done in the past year was last spring — a 5000ha sale in Southland which went from a New Zealand business to a European timber fund.

Fears that high-profile station sales would result in the land being locked up in carbon sinks were often illfounded and many buyers do not plan that use for the land, Searle says.

 ?? Photo / Warren Buckland ?? Big land deals in the latest figures all involved forestry.
Photo / Warren Buckland Big land deals in the latest figures all involved forestry.
 ?? ??

Newspapers in English

Newspapers from New Zealand