Clamping down on property and farm sales to foreign buyers would hurt New Zealand's economy, says one expert.
Labour and New Zealand First have agreed to restrict sales of residential land and farmland to citizens, permanent residents and companies that are majority NZ-owned.
Justin Ensor, a KPMG partner and deal advisory chief, questioned the effect of the new policy.
"New Zealand needs foreign capital to operate. If the impact of reforms is to cut off the flow of capital - particularly out of Australia into New Zealand - that could dampen this economy to some degree. We would then be more reliant on domestically raised capital. Economic growth relies on talent which is entrepreneurs, combined with capital which creates jobs," he said.
Labour leader Jacinda Ardern expects agreements with NZ First and the Green Party to be signed and released early next week but some new policy details have already been confirmed.
Lobbyist Murray Horton of the group Campaign Against Foreign Control of Aotearoa expressed delight, saying his organisation was founded nearly half a century ago for precisely these aims.
But one property boss said the policy would mark a return to "Fortress New Zealand".
Geoff Barnett, Century 21 New Zealand national manager, said he was personally concerned about this country's direction and he predicted the new Government could have a severe effect on wealth, house prices, trade, economic growth, jobs, access to skilled workers and other opportunities.
"We've had a free economy. We've traded freely with the world but from now on, we won't. We'll become an isolationist economy," predicted the real estate agency chain's boss after NZ First's promise to "slash" immigration.
Ensor said the policies could have a big impact.
"Some of NZ's top NZX listed companies need to apply to the [Overseas Investment Office] to do business. Yet many of their shareholders are New Zealanders. Listed companies can't control who is on their register," Ensor said, referring to many deals involving the sale of New Zealand assets from one overseas business to another.
Ensor said mergers between foreign entities with ownership interests in New Zealand assets can involve billions of dollars. If the ability for such deals to get official clearance was blocked, that might mean overseas businesses could be forced to sell their NZ assets, Ensor predicted.
"In order for a deal to go through, they might have to sell. Often the deal is so big, it's not going to not happen because of the law in New Zealand."
The exttent to which any changes could affect NZX-listed companies is as yet not yet known.
After opening down a per cent yesterday, the NZX-50 sharemarket index rebounded to be back the black.
However retirement sector stocks were all weaker, with Ryman falling 39c to $4.07, Metlifecare 15c to $5.88 and Summerset 12c to $4.96, based on concerns that the property market could tank under a Labour-NZ First-Greens coalition.
Retirement village companies are sensitive to movements in the real estate market and Labour, in the run-up to the election, talked about the possibility of a capital gains tax on property.
Labour proposed to set up a Tax Working Group, "to ensure that there is a better and fairer balance between the taxation of income and assets, in particular the capital gain associated with property speculation". The outcomes of the Working Group - if any - would not take effect until the 2021 tax year, it said.
The party also talked about scrapping the ability of investor-landlords to negatively gear their properties for tax purposes.
Uncertainty on the policy front comes at a time of cooling property prices and signs that immigration may have peaked.
additional reporting: Jamie Gray