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Which country is the biggest offshore investor in NZ?

Fears that Chinese investors are buying up swathes of New Zealand assets could be misplaced: Australia is the much larger offshore investor in New Zealand, accounting for more than half of all foreign buying.

A report by consultants KPMG, analysing foreign investment between July 2010 and December 2012, reveals 46% of overseas investment by value came from Australia, while Asia accounted for 16%.

Among Asian countries, Japan (53%) was a bigger investor in New Zealand than China and Hong Kong (33%).

Significant acquisitions made by Japan in the last two years included beverage companies Independent Liquor and Charlies.

North America, Europe and Australia combined account for about 70% of investment.

KPMG analysed Overseas Investment Office approvals for its inaugural Foreign Direct Investment Report.

The research also reveals there were significant levels of investment from unexpected quarters – with Germany, for instance, investing heavily in agribusiness in recent times.

Of the $300 million which German entities have invested here in the past two and a half years, agribusiness accounted for 86%, predominantly in dairy.

Korea appears to have dropped off the radar as an investor in New Zealand, with comparatively few Korean-based deals recorded by the OIO in the period.

KPMG partner corporate finance Justin Ensor says New Zealand remains an attractive environment for offshore investors generally.

“At KPMG we’re regularly engaged with overseas buyers involved with acquisition and due diligence processes – and our experience tells us that inbound investors are maintaining their levels of interest in New Zealand,” he says.

“New Zealand offers lower regulatory hurdles than in other territories, coupled with our stable political and legal environment. The recent uncertainty in Europe has no doubt made us an even more attractive proposition."

Other highlights from the KPMG report included:

  • The largest 11 transactions during the 2.5 year period accounted for approximately 40% of OIO-approved investment.
  • While China’s level of foreign investment appears relatively low in recent times, this may be about to change. Recent examples include press announcements over proposed investments in the dairy sector by Yashilli and Yili.
  • China, Germany and Sweden have been the most active acquirers of dairy land, accounting for over 70% of dairy land acquired by overseas investors in the last three years.
  • The UK and the USA remain the dominant acquirers of land by overseas investors. China is 14th on the list by area acquired over the last three years.

Comments and questions

And the good news just keeps coming. Poor old Russel and Winston with their hair will be falling out in frustration. Goodness, all this truth and good news and it's only Monday. Russel, fall on your sword now. Winston, do you still see an Asian invasion or is that just your ancestory showing?

Stats are that central Auckland residential properties are being bought up by Chinese. I just love these 'National' stats that are distributed with no thought for relevancy and used to try and dilute the real issues.
For central Auckland, Winston is on the money. The flow-on effect to the suburbs of the prices being paid by cash-rich Chinese are there for all to see.
It would be very interesting to see real estate figures for who is buying in central Auckland. I regularly attend the auctions for prime Grammar Zone property, and it isn't the Japanese or the Australians buying it up.

Immigration racketeering has replaced our immigration system and the Auckland property market is an example of the damage being done to the entire economy because of it.

What we need is some good investigative journalism to uncover whose palms are being greased at the expense of the economic future of the entire country.

Hear, hear!

The Americans screwed more out of NZ with Telecom than all the Asians combined ever made on their investments in NZ.

The Australians screwed more out of NZ with their purchases of Trust Bank, BNZ, ASB and CountryWide banks than any of the Asians could ever do.

So why all the angst about the investments by Asians?

Simple - Kiwis live up to their national icon, short-sighted and happy to feed on worms and insects while their white counterparts in US, Europe and Australia feed on them.

No wonder kiwis are becoming extinct!

Dragon, just accept it, you aren't an American and you never will be. Tell us about your childhood.

Why do I want to be an American?

Do not make the mistake that your desire to be a gringo is shared by others, ha ha.

Did you have a domineering mother?

A report by consultants KPMG, analysing foreign investment between July 2010 and December 2012, reveals 46% of overseas investment by value came from Australia, while Asia accounted for 16%.

Is that really surprising? It's not to me. Australia has been able to - and has - invest in NZ for decades. The same with Europe and North America. Most of Asia on the other hand has only being in a position to do so over the last 10-20 years. Prior to that, they were largely 3rd world countries and simply couldn't afford to.

What I think would be more interesting is to look at the relationship between the quanta of foreign investment in New Zealand by country and the ability of each country to invest in NZ, (access to capital markets, GDP, FTA, etc) over time.

Anyway, come back in 20 years and let's see how things stand then. I think they'll be very different.

As well they should.

Why should it be okay for Kiwis and Australians to own assets in Asia when they could in the 50s, 60s and 70s but not the reverse in the 2020s, 30s and 40s?

So much for the fears of the Yellow Peril. Winnie, shut your mouth.

Do some more homework and you'll find the US own a good chunk of Aussie.

US investors have their tentacles everywhere.

Working in the real estate industry I know of at least one Shanghai resident in the process of buying 50 homes in Auckland. At, say, $500k per home that is $25m in speculative purchasing. How can ordinary Kiwis compete with hugely wealthy individuals operating with this agenda? Kiwis' lifestyles are compromised due to speculative gambling of non-residents. This is not investment in NZ. It is opportunism and speculation that is driving our cost of living up just for the profit to then go offshore.

Arguably the tax on any profits made on such "property trading" will stay in NZ. If the properties are all bought for residential rental, the answer may be different, but one would expect that if this is the case, there is a happy NZ property manager whose livelihood has been enhanced through greater economic activity in NZ.
We should not be concerned about who makes money in NZ. We should be concerned if all of the profits are flowing overseas (i.e. Australian trading banks in the main), wherever they are going.

I suspect you are not someone in their 20s trying to buy their first home. You seem to suggest we should celebrate a mere handful of property managers making a living from these speculative activities to the detriment 10s of 1000s of NZers who cannot afford a home. I am not concerned at who makes money in NZ. I am concerned that NZers on the whole can't compete with the kind of wealthy individuals buying up a substantial portion of our housing stock ahead of them. A tax needs to be applied to non-residents purchasing homes here to temper the enthusiasm of that pool of buyers. They are making life in NZ unaffordable for the average citizen.