KEY POINTS:
A United Arab Emirates investor has bought into one of the country's largest development sites for $126 million.
In one of the top-three foreign investment deals so far this year, the Government's Overseas Investment Office said the Abu Dhabi Investment Authority was cleared to buy a half-stake in
the Lion Breweries development in Newmarket.
Zoltan Moricz of real estate consultancy CB Richard Ellis said the sale was the single biggest property deal in New Zealand this year.
The AMP Private Equity Real Estate Fund II, specially formed to transform the 5.2ha Newmarket site from a brewery into a new mini-village, got Government clearance to sell half its shares in the project to Haumi Development Partnership, 100 per cent owned by UAE interests.
The AMP fund, 27 per cent Australian-owned, is a special-purpose vehicle established by AMP Capital Investors which last July said it would bring a $1 billion project to Newmarket and develop dozens of shops, hundreds of apartments, thousands of carparks, large offices and maybe even a high-rise retirement village in the next few years.
But since then, AMP has struck big financial problems.
In August, AMP suspended redemptions and would not accept new applications for its unlisted Capital NZ Property Fund, a move being taken "in the best long-term interests of investors".
Lion has long planned to leave the Newmarket site and it is already spending $250 million developing new buildings at 55 Ormiston Rd in South Auckland.
Cameron Brewer, general manager of the Newmarket Business Association, welcomed the Arab investment but questioned who would control the development.
The Government authority said AMP's existing team would run the project "in substantially the same way in which the business had been conducted to date".
The $126 million Arab deal was in the top-three applications from foreigners this year: the $777 million deal for Cheung Kong Infrastructure Holdings and Hong Kong Electric Holdings purchase of Vector Wellington Electricity Network and the failed $106 million deal for Crescent Capital Partners to buy Abano Healthcare Group for $106.7 million.
The authority said the asset value was $172.8 million but the net investment by the Arab business was $126 million.
The authority said AMP needed the money to develop the project.
"In order to obtain new funds to explore alternatives and develop the property, the vendor wishes to sell 50 per cent of the issued share capital," the authority said.
Mr Brewer said the investment was welcome and meant the huge project could move forward with confidence.
"We trust they are just as committed to a high quality mixed-used development as AMP Capital Investors are. This is one of the biggest single sites left in the central city and given it borders upmarket Newmarket, quality is key.
"In the end we don't care so much who the owners may be. We're more interested in ensuring Newmarket gets a world-class outcome everyone can be proud of," he said.
The Arab entity told the Government authority it was keen to further its interests here.
"Abu Dhabi Investment Authority is interested in continuing to participate in real estate development projects and has evaluated the investment in New Zealand taking into account several factors. Its intention is to gain investment exposure to the New Zealand property market in order to create a diversified property portfolio which will complement other investments made in the real estate market in other countries," the authority said.
The Arab business already has a stake in another AMP business.
In January, the Abu Dhabi Investment Authority bought 19.9 per cent of the listed AMP NZ Office Trust and struck a $178.2 million deal with AMP Capital Investors.
LION BREWERIES SITE
* $1 billion shop and apartment project planned
* Development by Australian insurance giant AMP
* Financial problems sparked AMP to sell
* Now, Arab interests have bought a half stake
