US largest overseas buyers of NZ land, KPMG study finds

Wednesday 2nd November 2016

Investors from the US States were the largest overseas purchasers of land in New Zealand between 2013 and 2015, analysis of Overseas Investment Office approvals shows, with China far behind.

The KPMG study, Foreign Direct Investment in New Zealand, shows the US bought 40 percent of OIO approved land sales. China purchased 11 percent, while Hong Kong bought 7 percent. The authors say that forestry transactions are the most significant driver of this statistic, rather than dairy or agribusiness.

The US and Canada were the most significant source of foreign direct investment over the three years, with the US providing 17 percent, Canada 15 percent, Australia 12 percent and China 9 percent. This may downplay Australia's involvement because NZ investment below $496 million which doesn't involve a fishing quota or sensitive land no longer requires OIO approval.

The report's authors note that Asian countries "have generally had a narrower investment focus on dairy, food and the waste management sectors. By contrast, the traditional investment markets of the US and Australia have a much broader base of investment, perhaps reflecting the maturity of their economies and their investment networks."

The majority of overseas transactions involving New Zealand assets or companies "are between an offshore vendor and an offshore investor," the authors add.

Total investment in New Zealand by overseas investors for the three years was $26.3 billion. The largest transaction was the sale of listed consumer goods company Goodman Fielder in Feb 2015, for $1.27 billion. The dominant vendors were Australian, while the new owners are based in Singapore and Hong Kong.

Investment into energy, power, and utilities made up the largest sector of investment at 18 percent, reflecting the government sell-off during this period. Real estate was second, at 16 percent, partly reflecting the $1 billion purchase of shopping centre owner St Lukes Group by Singaporean investors in March 2015. Agribusiness made up 13 percent of total investment.

Chinese investment into New Zealand was overwhelmingly focused on energy, power and utilities, with the sector making up 70 percent of all investment. By contrast, agribusiness was just 16 percent. However, agribusiness made up four of the top 10 transactions made by China over the period.

Breaking down the agribusiness sector, investment in dairy and milk processing made up 38 percent of investment, reflecting a period in which diary prices peaked. Forestry made up 17 percent, wine 14 percent, and beef and sheep 9 percent.

China was the largest foreign investor in dairy at 28 percent, with France the second largest investor on 13 percent. Total investment in agri-business was $3.4 billion.

Ian Proudfoot, KPMG's Global Head of Agribusiness, said it was vital New Zealand remained open for business.

"The only way we're going to create a fairer share of the value we create is by having good quality foreign partners in offshore markets so that we can grow businesses of a global scale."

Proudfoot cited the deal between Silver Fern Farms and Shanghai Maling, due to take effect from next January, as an investment that would grow New Zealand's presence on the world stage.

BusinessDesk.co.nz

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