Land grab: All white by us

By Susan Edmunds

Overseas buyers are slowly chipping away at our coastlines. But Hollywood directors and pop singers have a better chance of winning public approval than well-meaning Chinese businessmen. Susan Edmunds investigates our double standards

Opononi Hotel manager Colin Tet Tai says local families are being priced out of the market.
Photo /  Malcolm Pullman
Opononi Hotel manager Colin Tet Tai says local families are being priced out of the market. Photo / Malcolm Pullman

On a weekday afternoon, Gulf Harbour is deathly quiet. That is until a bunch of schoolboys - still wearing knee-high socks - pull up in an ageing Japanese hatchbacks and head out to the jetty with boxes of beer under their arms. As a backdrop, a collection of immaculate colonial-style villas slot in next to a row of rundown Mc-Mansions, the paint peeling from the roller doors of their internal garages.

This is Gulf Harbour today, one of those late 20th-century housing developments, born out of a good idea but left to flounder. Conceived by a Singaporean investor in the late 1990s, the plan was for a Mediterranean-style seaside town, perched on the end of the Whangaparaoa Peninsula. Nice homes with a luxury launch moored at the end of the garden.

Instead, it has evolved into a sprawling mess of what residents call "Noddy houses" - row after row of identical town houses, packed tightly together, some now owned by the Government as state houses. Locals say some are being used to make P.

One resident, a mother of seven, says Gulf Harbour is isolated but she lives there because the rent is cheap. "And there's even underfloor heating and en suites." It is the empty, grassy space at the end of the street where the teenagers have crawled through a hole in the gate that is capturing interest.

The waterfront chunk of overgrown sections, with roads and street lighting installed but little else apart from discarded RTD bottles, is owned by now-bankrupt developer Jamie Peters. He owes $155 million on his Gulf Harbour development and the Overseas Investment Office is considering an application by Asian investors to buy 32ha.

Three of the directors are registered in Shanghai, one is in Hong Kong, and New Zealand-based Tony Lee rounds out the board.

There is still space for development in Gulf Harbour, although the market is saturated with houses for sale. But locals say they are worried that more development of the wrong kind will do more harm than good. And there's concern that overseas investors will not work as hard for their investment as their New Zealand counterparts might.

It's concerning for locals such as Debbie Morgan, an artist and shop owner who is trying to keep Gulf Harbour above water. When Peters went bankrupt, he took a fledgling weekend market with him. Morgan has resurrected it at a different site.

Other developers, such as the Marlin Group, have gone out of business in the 13 years Morgan has lived in Gulf Harbour, leaving common areas neglected and lawns unmown. Morgan and other Gulf Harbour retailers have to pay for the upkeep of the town. Morgan is nervous about the idea of more of the land passing into foreign ownership. ]

"Obviously, if it could stay in New Zealand hands, that would be good. It needs to be the right development, there's too much of the wrong stuff.Gulf Harbour used to have a good reputation but it doesn't any more." Tim Downes, business advisory services partner at Grant Thornton International Ltd, expects a decision this month. He says despite the concerns of locals, there has been no official opposition to the sale. Approval is merely a formality because of the size of the transaction.

Overseas investment in New Zealand is a touchy topic right now. First the Crafar farms furore, now there's an "I told-you so" element to the arrest of internet mogul Kim Dotcom, facing charges of money laundering and copyright infringement after an American driven swoop on the sprawling Coatesville mansion he rents.

It was Dotcom's attempt to buy the $30 million Chrisco property, and another property in Northland, that highlighted inconsistencies with overseas investment policies. He was granted New Zealand residency but was deemed to be of insufficient character to buy sensitive land in his adopted homeland. His attempt to buy the Chrisco mansion, a neighbouring property in Coatesville and a property in Doubtless Bay were waved through by the Overseas Investment Office but then stopped by then-ministers Maurice Williamson and Simon Power.

While Dotcom's convictions for hacking, credit card fraud, insider trading and embezzlement were not considered in his residency application because they had been wiped by clean-slate legislation, the overseas investment procedures considered all convictions. He managed to buy the second Coatesville property because it was small enough not to require OIO approval. But Dotcom's property shopping was small fry compared with the purchase of the Crafar farms, now in liquidation, by the Shanghai-based Pengxin group.

The Government and the OIO gave the stamp of approval for the Chinese investors to pay $210 million for the 16 farms. It has sparked an outcry - something that has not surprised Landcorp chief executive Chris Kelly. Landcorp had previously put a bid in for the farms and Kelly says he received a deluge of emails in support of the proposed purchase. That indicated to him at the time that NewZealanders were opposed to such a large chunk of dairy farm land passing into overseas ownership.

But the Chinese shopping spree sparked a different reaction. Murray Horton, of the Campaign Against Foreign Control of Aotearoa, is leading a lot of the opposition and says it is an issue of maintaining control. His group fears that this country will become just a pinpoint on a map in the boardroom of a multinational company, somewhere in the world.

"Ownership means power and control. It's the difference between being an owner and being a tenant," he says. The group argues that selling farms to foreigners is a particular worry because every overseas investor who comes in willing to spend top dollar shut out a Kiwi farming family - the business units that have traditionally been the backbone of New Zealand's economy.

Horton thinks the rules for foreign ownership have been loosened considerably. He's concerned that the "faceless" Overseas Investment Office is making decisions without enough public scrutiny, citing a $1.3 billion deal that received approval in the middle of 2011, with all the details suppressed. Any investor who is not a New Zealand citizen, nor ordinarily resident in New Zealand, is required to gain OIO approval before buying sensitive land, business interests worth more than $100 million or any part of a fishing quota. Investors must prove, among other things, that their purchase will benefit NewZealand or its citizens.

Business commentator Bernard Hickey is opposed to the sale of land to non-residents. "We need to block the drain of cash leaving the country in the formof dividends and profits to absentee landlords." Sir Michael Fay, whose bid for the Crafar farms was beaten by Pengxin, says Landcorp's involvement was just an attempt to sanitise the deal to make it more acceptable to the New Zealand public.

"Landcorp is lending a New Zealand face and New Zealand expertise to an overseas bid that fails to meet the Overseas Investment Office test of adding value to an asset. Shanghai Pengxin admits it knows absolutely nothing about dairy farming." says Sir Michael. New Zealand First leader Winston Peters predictably came out roaring over the sale, accusing the Government of delaying the sale announcement until after the election.

"New Zealanders have every reason to feel outraged and betrayed. Our country is being run for the benefit of foreign companies and the international money industry." But others say issues like the Crafar sale is not so much the sale of land overseas, but xenophobic fears about the sale of land to Asian investors.

Landcorp's Kelly says he does not want to go as far as saying the opposition is racist, as Minister Maurice Williamson has, but points out that the amount of investment by Chinese people is very small.

Chinese ownership of land in New Zealand is 150ha, compared to 20,000ha owned by US investors, he says. "The Chinese interest is dwarfed by sales to other offshore parties." The OIO made the Pengxin investors jump through hoops, Kelly says. "It's been arduous for them."

As part of the deal, Pengxin must protect pa sites and improve walking access to Pureora Forest Park and Te Rere falls. He thinks the process was been especially rigorous because the OIO was conscious that the sale would be controversial. And there are those who point out Hollywood film director James Cameron's purchase of $20 million worth of Wairarapa farmland hasn't provoked the same reaction.

Nor did singer Shania Twain and her former husband, music producer Robert "Mutt" Lange, when they bought two South Island high country stations in 2005 for $21.4m. The couple split in 2008 and Lange nowowns the properties. He has since increased his South Island holdings to 55,400ha after buying another two stations.

Horton says Cameron's purchase is acceptable if the director of films such as Avatar and Titanic is sincere in his plan to live in New Zealand full-time, and not become an absentee landlord. And Hickey too is fine with the Cameron deal as long as he lives here and reinvests the profits into the farm or his movies, he says. Cameron will generate jobs and income for New Zealanders, while the new owners of the Crafar farms will not.

Labour leader David Shearer was opposed to the sale of the Wairarapa land until he found out Cameron was the buyer, prompting Prime Minister John Key to accuse him of "making it up as he goes along". Peters is still opposed, saying it took away the right of New Zealand farmers to run those farms.

British and Australian investors are by far the biggest foreign purchasers of land in New Zealand. Between 2007 and 2011, Australian investors paid $10.6 billion in OIO transactions. They were followed by the US, with $10b, Japan at $5b and the UK at $3b. China does not even register in the lengthy list of countries that have invested.

The 2002 to 2006 figures show Chinese investors were responsible for deals of just $162 million. And the land deals keep on happening. In the first five years of this century, 158,588ha of land were ticked off for sale to overseas investors. Between 2007 and 2011, more than 1000 deals were signed off by the OIO. Large farm blocks were particularly popular.

In Opononi, the sale of 250ha of farmland, some of it leasehold, to a British couple has gone relatively unnoticed. Calum Kerry McKenzie and Felicity Jane McKenzie paid $1.36 million for the land, to be used as a grazing block for cattle. Kerikeri lawyer Richard Palmer acted for them and OIO approval was granted in December. "It's a detailed application that is looked at really carefully by the OIO."

Down the road at the Opononi Hotel, manager Colin Te Tai reckons the lack of attention is probably because everyone in the area is resigned to this kind of thing. He sees foreign investors coming in and buying up slices of Northland all the time. He says locals were upset at investors buying in, and shipping out to become absentee landlords. Young local families are being priced out of the market, he says, by people coming into the country with wallets fat with foreign currency. "People are losing control. It's not necessarily farms but houses and bits of land. People put houses on them and just leave them as baches."

Property developer Leigh Hopper - who markets some of his coastal developments to overseas buyers-says he doesn't think it is getting any easier for foreign investors to buy New Zealand land. He thinks other countries are relaxing their controls on foreign investors but NewZealand is not.

Peter Hill, OIO research support officer, says New Zealand has similar regulations to Australia. In 2010 the Government directed the OIO to consider whether New Zealand's economic interests were being safeguarded adequately and whether an overseas investment allowed opportunities for New Zealand involvement. But as a nation of spenders, not savers, our options may be limited. Without a compulsory superannuation savings scheme, or intensive Government investment in New Zealand rather than the global sharemarkets, in many cases the big bucks have to come from overseas. Hopper says New Zealanders need to get over their fear of foreign investment.

"We are a multicultural nation now and I suspect if we want to maintain our standard of living, we are going to have to embrace it. We need to open our boundaries to people from all corners of the earth, foster it, cherish it, invest with them and we'll profit." New Zealand does not have the money to compete on a global scale without the input of foreigners, he says. Horton says farmers are generally against the idea of foreign purchasers buying into the industry- until their business is on the block and a foreign contingent offers millions more than any local is willing to offer.

The key issue seems to be whether foreign investors put back at the same time as they take out. Gulf Harbour, Country Club deputy chairman Doug Godfrey reckons locals should not look a gift horse in the mouth.

An injection of capital is just what the area needs, no matter where it comes from. He doesn't understand what the fuss is about. "It's not like they can take it away," he says. He thinks the sale of Gulf Harbour land to Asian investors is no different to the sale of Northland land and Cape Kidnappers to American Julian Robertson. "But people are happier with an American."

Godfrey reckons people needed to realise foreign investors want what any other investor want - an investment, a return on an investment and a lifestyle. "You don't come to New Zealand to get rich, you come for the lifestyle.


- Herald on Sunday

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