One of Britain's richest men has dropped plans to redevelop a Waiheke Island retreat and quit New Zealand.

James Palumbo, or Lord Palumbo of Southwark, won Overseas Investment Office consent to transform an $8 million waterfront farm into a major music artist's retreat, with plans to expand his successful business into New Zealand.

But three years later, the Ministry of Sound founder has sold.

Ollie Wall, of Graham Wall Real Estate, said the property had changed hands from the upper-crust Brit, to New Zealand owners.

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Property owned by Briton, Lord Palumbo in Omaru Bay on Waiheke Island is being sold by Graham Wall property agents.
Property owned by Briton, Lord Palumbo in Omaru Bay on Waiheke Island is being sold by Graham Wall property agents.
Lord Palumbo of Southwark.
Lord Palumbo of Southwark.

"I sold the Palumbo property the last time. All I can say is it was to a lovely, down-to-earth Kiwi family," Wall said.

Palumbo's lawyer in New Zealand said there were good reasons for the sale.

Graeme Todd, of law firm Todd & Walker in Queenstown, told the Weekend Herald: "Given a change in Lord Palumbo's personal circumstances he disposed of the property. This was before all of the conditions of the OIO consent were fully implemented."

Asked what the change of circumstance was, Todd said "that's privileged information."

The property has a number of buildings on it.
The property has a number of buildings on it.

Palumbo launched Ministry of Sound with a school friend in 1991. The house music party business expanded into publishing, merchandise and recorded music. It is the world's largest independent music company with more than 70 million album sales. Palumbo sold it to Sony in 2016 for more than $100m.

The 54-year-old applied in 2015 to buy the Waiheke property overlooking golden Omaru Bay, near the Te Matuku Bay Scenic Reserve.

Under the Overseas Investment Act, Palumbo wasn't automatically allowed to buy the bush-clad 26ha waterfront holding because he's a Brit and the beautiful farm is classified sensitive under the law, being rural and waterfront.

That means non-residents and non-New Zealand citizens are barred from buying, without going through the Overseas Investment Office application process which allows such deals to proceed only if a set of conditions is met.

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Views over the property and Omaru Bay.
Views over the property and Omaru Bay.
The home has a wonderful view.
The home has a wonderful view.

To be allowed to buy, Palumbo cited a list of benefits to New Zealand including providing employment and doing the place up.

On December 1, 2015, the consent for James Rudolph Baron Palumbo of Southwark to buy 609a and 609b Orapiu Rd from New Zealand interests Casterton No 1 Trust, Casterton No 2 Trust and the Callow Family Trust was approved. The land area was 26.9954ha.

"The applicant plans to acquire the land for the purpose of developing an artist's retreat for musicians. As part of the development the applicant also intends to restore and enhance the indigenous vegetation on the land," the approval said.

The retreat Palumbo bought, then sold, on Waiheke Island.
The retreat Palumbo bought, then sold, on Waiheke Island.

Palumbo had told the state agency he would establish jobs, make additional investment for development purposes, restore and enhance indigenous vegetation and offer to sell seabed/foreshore to the Crown. The Weekend Herald understands this was Palumbo's genuine intention at the time.

Murray Horton, of the Campaign Against Foreign Control of Aotearoa, said the law was too slack.

Horton said The Times in Britain had reported on rich Brits buying "bolt holes" in New Zealand and that concerned him.

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Graham Wall was quoted in The Times as saying: "Americans sort of see it as California in the 1960s, a carefree place where the rules still apply, where there is no corruption and not too much nepotism so the chances of succeeding are great."

The Waiheke property boasts two beaches, two quality homes, a boat shed and shearers' shed.
The Waiheke property boasts two beaches, two quality homes, a boat shed and shearers' shed.

The Government has promised to tighten the laws, via the Overseas Investment Amendment Act which had its first reading in the House before Christmas. OIO data shows approval numbers dropped from 23 between January and March last year to 13 in the first three months of this year. Net investment also fell from $1.3 billion last year to $493 million this year.

The Waiheke property boasts two beaches, two quality homes, a boat shed and shearers' shed.

A QV spokesman said: "609 Orapiu Rd sold for $7.5m in June last year. It comprises 25.5557ha and has two dwellings and a collection of other buildings. The 2017 rating valuation is $8m and the land is assessed at $7.2m."

A lounge with a view.
A lounge with a view.

Palumbo is the son of the eldest son of property developer Peter Palumbo, but is estranged from his father after a legal dispute in the 1990s. He was listed in the Sunday Times Rich List 2017 in 336th place with an estimated fortune of £350m and has published two novels.