British investors eyeing NZ farms
Global recession has triggered a lack of faith in UK banks and financial institutions driving wealthy Britons to take new interest in buying New Zealand farmland.
Well-heeled investors in Britain are withdrawing funds and lining up New Zealand farms as land-bank holdings which are seen as a safer investment in the current climate, according to Bayleys.
The real estate company regularly promotes New Zealand property offshore, and each year conducts a "Farming NZ" roadshow across Britain, showcasing New Zealand farms to English and Irish farmers.
Bayleys has sold about $362 million worth of farms and agricultural-related properties to UK buyers since 2002.
Today it said that collapse of major UK banks, building societies and lending institutions had sent jitters through the British economy.
Bayleys said it had signed a deal with one of Britain's biggest agricultural and rural property companies, Smiths Gore, to channel millions of pounds of UK investment funds into NZ rural properties.
Land values in NZ have dropped dramatically from their peak of two years ago at the height of the dairy boom, a bigger fall than has been seen in British farm values.
"This has created an investment disparity which many of our clients have expressed an interest in taking advantage of," Giles Wordsworth, head of Smiths Gore's farm agency, said.
"We are confident of putting together a sizeable portfolio of rural real estate to present to our clientele: New Zealand has long set the rural production benchmarks British farmers admire."
Mr Wordsworth warned NZ farm owners not to build up unrealistic price expectations "in the hope of making a quick buck from investors on the other side of the world".
"Our clients are extremely astute when it comes to land pricing and the operational structures of the farming business they are buying," he said.
"They are highly discerning when it comes to investment, and certainly won't be throwing around funds.
"Our typical UK investors would buy the productive unit as a going concern -- whether it be sheep and beef, dairy, arable or viticulture -- then put in local management to run the operation.
"This local management is often the previous owner, who is guaranteed an income from the land yet is free from the restraints and concerns of funding the business. Technology and communications now allowed for the day-to-day operations of a farm in Matamata to be viewed and managed in "real time" by an owner in Yorkshire, Mr Wordsworth said.
Signup to free NBR email alerts here
Back to home
Back to top
Print
Email
Share
Delicious
Digg
StumbleUpon
Reddit
Google
Yahoo
Technorati
Scoopit
NBR SERVICES
SUBSCRIPTIONS
Sign up for NBR subscriber content or email alerts
Latest
Comments and questions3
The number of farms that continue to ignore environmental laws (predominantly effluent run off) that have long been in place are now being increasingly prosecuted and fined thousands, this indicates that the "honeymoon period" is over and lets hope that these wealthy investors are not only going to purchase the farms but use their extra cash to bring them in line with current laws to protect our environment and waterways. These compliance costs should be taken into account when calculating yields for the good of NZ.
While UK investors may be keen to invest in NZ land, it should be mentioned that the Overseas Investment Act has not been repealed and that more tha 5ha is still subject to approval. That doesn't act as a deterant, but it means investors simply buying land isn't the case.
Also, which investors? Farmers in the UK are already subject to a land cost intensive business with EU subsidies, so where they're going to have large amounts of money to throw around isn't explained (other than the subsidies). The financial crisis may have caused jitters, but for people who aren't farmers and who have little understanding of farming or farming business (especially in an international / NZ context). The good news is that this might lead to EU subsidies being used to fund farming here, albeit inadvertently, and that would be worth the amusement value unto itself.
It's good to see the NZPA is still writing entirely one-sided articles with no background content (and that NBR is publishing them). This reads more like a Bayley's advertisement than anything else.
I agree with the comment above and have had two unrelated Swiss clients forest block investments effectively declined by the OIO in recent months because the OIO did not consider the purchases were of 'substantial and identificable benefit to NZ'.
With the OIO criteria that exist at the present time (and the way they are being applied) it is not a foregone conclusion that a British purchaser would be able to obtain OIO consent to purchase a rural block in NZ.
Post new comment or question
To share this article, click on a service below