Agribusiness Report: Foreign purchases and rural propertySave
By Colin Taylor
It is difficult to determine if the purchase of rural properties by foreigners is a catalyst for higher rural land prices, but data supplied by the Overseas Investment Office (OIO) contains surprises -- like the tiny Grand Duchy of Luxembourg and principality of Monaco having received OIO approval to "invest" in more New Zealand land during the past five years than much-maligned China.
Annelies McClure, manager of the Overseas Investment Office (OIO) at Land Information New Zealand (Linz), says her office "does not know how much non-urban land in New Zealand is in overseas ownership and there is no baseline establishing foreign ownership of non-urban land.
"The OIO does keep some records of consents granted but records are only reliable from around 1998. Land consents were only granted under the Overseas Investment Act from 1996 and prior to that, consents were granted to overseas persons to purchase farmland by the Land Valuation Tribunal which kept no data."
Tracking sales and establishing if buyers are New Zealanders or not would require "an infinite and complex monitoring regime".
Other factors contributing to the OIO "not knowing" how much rural land is owned by foreigners are:
• Granting of consent by the OIO does not mean purchases will proceed.
• Overseas owners can change status e.g. become New Zealand citizens or permanent residents.
• Overseas owners may sell the land.
Foreign ownership of land became a hot political issue when China's Shanghai Pengxin Group bought 8000ha comprising the former North Island Crafar Farms. Anxiety about Chinese farmland purchases heightened when Pengxin, through its 74 per cent holding in SFL Holdings, purchased 4000ha of land encompassing 13 dairy farms from Canterbury's Synlait Farms.
Don Nicolson -- former president of Federated Farmers, normally a staunch supporter of National Party policies -- while in office said New Zealand should only sell land to countries that allowed Kiwis to buy their land; New Zealanders can only lease land in China. Nicolson is now ACT's primary industries spokesman and is standing in the Southland seat of Clutha, Finance Minister Bill English's electorate.
Labour leader David Cunliffe has announced that if Labour wins the upcoming election, foreigners not living in New Zealand will be prohibited from buying farmland in lots greater than five hectares.
Likewise Green Party Co-leader Dr Russel Norman vows that any coalition government the Greens are involved in will be pressed to restrict foreign investors from buying farmland here. Dr Norman has suggested the National Government needs look at how China successfully restricts land sales to foreigners.
Adding to this political mix is New Zealand First leader Winston Peters who says his party's policy has always stipulated that farmland should be owned by New Zealanders -- "not by everybody around the world" and especially not by "absentee" owners. Again Peters has promised to adopt policies akin to China where Kiwis can't buy property, only lease it.
Prime Minister John Key has denied news reports he's advised Chinese investors to look at long-term leases here instead of making land purchases. However during his recent tour to China, it was reported he confirmed telling Ngai Tahu's leader Mark Solomon, during a discussion on foreign ownership at a conference in Kaikoura, that leases could be for 50 years or more, so that wasn't much different to buying land.
The Prime Minister has defended rural property sales, claiming less than 1 per cent of all farmland has been sold to foreign investors, whereas Peters put the figure at 150,000ha of the nation's farmland in the past five years -- "an area almost the size of Stewart Island".
Interestingly, a Linz document entitled Summary of Approved Investments by Country, from January 1, 2009 through to December 31, 2013, gives the total of all "approved investments" in gross land area by country, from 2009-2013, as 971,524ha -- an area nearly six times the size of Stewart Island at 170,000ha.
According to this data, Americans have recently invested the most in New Zealand property with US interests receiving approval to "invest" in a gross land area of 271,576ha over the five-year period. Next is Canada with 156,714ha, then Israel 75,396ha, UK 76,246ha, Australia 42,979ha, Switzerland 39,280ha, Netherlands 32,711ha, Luxembourg 27,249ha, Monaco 26,094ha and -- well down the list -- China with 23,999ha.
More recently, the OIO's Summary of Approved Land Investments by Industry under an "Agriculture" heading, shows approval for foreign "investments" from January 1 to June 30 this year was 14,969ha of freehold land and 939ha of non freehold land.