Associate Finance Minister David Parker. Photo / Mark Mitchell
Associate Finance Minister David Parker. Photo / Mark Mitchell
Foreigners spent $17 billion on New Zealand assets last year, nearly double the previous year's spending, but the Government plans to further tighten the overseas investment regime.
Although the Labour-led Coalition Government has moved on some aspects of foreign investment - particularly on the housing and dairyland fronts - commercialdeals have rocketed ahead lately.
Foreign deal approval numbers rose 60 per cent from 82 in 2018 to 131 last year and Canadians were by far the biggest buyers, official data shows.
The gross value of purchases rose 70 per cent, from $10.1b in 2018 to $17.1b last year.
Canadians spent the most at $1.1b, more than double the Chinese at $520m, Japanese at $510m, Danish at $470m and Singaporeans at $459m.
In November, Associate Finance Minister David Parker outlined plans for new powers to block foreigners from buying key infrastructure, military technology or major media companies and new tests for investors wishing to export water, following public concern before the election.
Parker said the most significant change would see the creation of a national interest test, which will mean sales of infrastructure of a certain scale will be subject to government approval.
Overseas Investment Office tables showed an overview of approvals granted in the 11 months from January to November 2018 and the same period in 2019.
The full year's summary of 12 months won't be issued until the end of this month when the OIO will release information on the December applications and incorporate that data in the annualised figures.
Yet information published so far gives a clear overview of foreign investment in this country lately and shows a rising interest from overseas.
Last year's three most valuable applications for deals involving foreign interests were:
• Bank of New Zealand and National Australia Managers as trust manager of the BNZ RMBS Trust Series 2008-1's purchase of part of a securitisation programme established by the Bank of New Zealand in 2008, a net investment of $1.2b;
• United States: 24 per cent-owned Titan AcquisitionCo New Zealand's purchase of up to 100 per cent of the shares of Trade Me Group, a net investment of $1b;
• Mexico's Global Valar, S.L.'s purchase of Restaurant Brands New Zealand for $575m.
In terms of net freehold land areas, the three largest approvals this year were:
• Switzerland's Kauri Forestry LP's proposed acquisition of 4273.5029ha 134 Lagoon Hill Rd, Tuturumuri, South Wairarapa;
• Kauri Forestry LP's purchase of 1876.7519 hectares of freehold land situated at Lucas Rd and Pokapu Rd, Moerewa, Northland;
• Austria's Veronika Leeb-Goess-Saurau and her purchase of 1727.6902 hectares of freehold land situated at 1940-1941 Te Ore Ore Bideford Rd & 73 Stoddarts Rd, Masterton.
Murray Horton of CAFCA opposes foreign investment. Photo / File
Murray Horton of the Campaign Against Foreign Control of Aotearoa attributed last year's foreign buyer rise to what he sees as a lax legal regime.
"They see that they have very little to worry about in terms of the Government's review of the Overseas Investment Act. In 2018, they were waiting to see how things would pan out from a newly and unexpectedly elected government, one which said it actually planned to tighten up the foreign investment regime," Horton said.
While the Government banned foreigners from buying lifestyle and residential properties here, Horton said it had done little more.
"Yes, there have been some changes, welcome as far as they go but nothing substantive," he complained.
Greg Knowles of KPMG. Photo / File
Soon after this Government got into power, Finance Minister Grant Robertson issued the rural land directive demanding the OIO examine benefits for rural land purchases like jobs, more exports and processing.
Horton said last year's rise in foreign activity showed businesses and land buyers saw operating in New Zealand as "pretty much business as usual. I'd say that will continue in 2020. It might ease off a bit until they see which way the election goes. If National wins, I have no doubt it will escalate. But they really have nothing much to fear from a re-elected Labour coalition government," Horton said.
Greg Knowles, a tax partner at KPMG and national leader for deal advisory tax on mergers and acquisitions, took the opposite view to Horton, valuing the input foreigners have to New Zealand's economy.
"The first half of 2019 was pretty quiet but the second half was busy, with everything from finance companies to property", Knowles said.
Agricultural deals had slowed lately: "Dairy [purchases by foreigners] are really hard to get through because the Government has blocked them. It's a stricter regime and big tracts of rural land is a no-go really."
Jose Pares Gutierrez, CEO of Mexican company Finaccess Capital. Photo / Peter Meecham
José Parés Gutiérrez, chief executive of Mexico's Finaccess Capital which took over NZX listed Restaurant Brands, said earlier last year that he found the New Zealand OIO process as good or better than anywhere else in the world, and that included the US, Eastern Europe and Russia.
The Herald reported at the time that his comments suggest the Government's tougher line on foreign investment and the introduction of the Overseas Investment Amendment Act 2018 may not have much effect on foreign takeovers of NZX firms.
Refusals to allow transactions such as the proposed Tegel chicken farm in Northland and the Waihī mine expansion sought by Oceana Gold have been highly publicised.
In October, Canada's Mercury Agriculture LP was barred from buying an interest in Rangitata Dairies, which holds a big portfolio of South Island farmland.
Yet the Government's reform of the act made forestry deals much easier and in September last year, nine forestry consents were granted.
