Karaka Point Vineyard and Lodge is set over 8ha of landscaped gardens and features three lakes. Photo / Supplied
Wealthy foreign investors have been forced to offload a boutique vineyard and lodge at a huge loss after failing to meet strict Overseas Investment Office (OIO) rules.
Chinese company Xindongyue Group NZ Ltd was granted consent to purchase Karaka Point Vineyard and Lodge at Clarks Beach for $2.99 million in 2014.
It promised to grow production and export 131,000 bottles of boutique wine to China within three years, creating jobs and increasing investment and export receipts.
However, documents released to the Herald under the Official Information Act show it failed to achieve its lofty goals, with less than 10,000 bottles produced between 2015-2017 and export receipts down nearly 70 per cent on those forecast.
Former owner Anne Martin, who lovingly developed the picturesque winery and lodge over 25 years, claimed the foreign buyers had "abandoned" the vineyard operation and let her life's work fall into "rack and ruin".
Martin told the Herald she believed "they lost interest pretty quickly".
She felt it was "too hard for them, they were a young couple and they just weren't into that kind of work".
Xindongyue Group NZ Ltd's director, businessman Desheng Zhao, convinced regulators his venture would deliver "substantial and identifiable benefit to New Zealand".
But the Herald can reveal the company was forced to sell the 8ha property this year for failing to comply with consent conditions designed to protect sensitive Kiwi land and promote New Zealand's commercial interests.
An OIO investigation report obtained by Herald shows the company failed to meet business plan targets for wine exports, luxury accommodation, functions and vineyard maintenance.
"Images supplied of the property show the vineyard is overgrown and does not appear to be well-maintained, which is not consistent with your plans to cultivate a commercial vineyard nor the concept of luxury hospitality accommodation services," investigators wrote to the company directors last year.
In response, the company blamed "substantial setbacks" in establishing inroads into the Chinese market, admitting "the results have not been satisfactory".
The OIO said it was a "serious failure" that the company had not reported the ongoing problems to the regulator.
"Your reported activities show you have substantially and materially deviated from the terms and timeframes to develop the business."
The company was ordered to dispose of the property or risk further enforcement action, which could include up to a year in prison or $300,000 fine.
Property records show Xindongyue Group NZ Ltd sold the luxury vineyard and lodge in May this year to New Zealand Cook Commerce Ltd for $2.398m.
That's nearly $600,000 less than it paid seven years earlier, despite one of the biggest housing market booms in history.
Xindongyue Group NZ Ltd's current directors are Lin Li, whose address is listed on Companies Office records as Karaka Point Vineyard, and Zhao of Shandong Province, China.
Herald attempts to reach the directors were unsuccessful and the vineyard's phone number no longer works.
Karaka Point Vineyard was set up in 1994 by restaurateurs Mik and Anne Martin.
The boutique vineyard and cellar door was a popular wedding and function venue, while also producing award-winning wine.
The property featured landscaped lawns, three picturesque lakes, a sprawling orchard and olive grove, plus five-bedroom homestead with a heated 12m enclosed swimming pool, gym and sauna.
It also came with a private collections of European statuary.
Martin told the Herald that after selling the property, she was initially contracted to train the buyers in the vineyard's operations.
But Martin felt they appeared to lose interest and she was only aware of one export shipment, which she had helped oversee.
She later heard the couple had abandoned the vineyard so visited herself for confirmation.
"I drove out there and just threw my arms up in horror. It was just appalling.
"They had felled trees over the chardonnay vines, the swimming pool was green and the statuary had fallen into the lake. The orchard was sort of dead and they had pulled out the olive grove.
She said she felt they had basically "let the whole place go to rack and ruin".
"I left in tears."
Martin believed the investors' $600,000 loss reflected the once magnificent property's sad state.
It also raised questions about whether "overseas investment is always for the right reasons".
"I don't know why they bought it."
Lawyer Alex Witten-Hannah represented the Martins during the 2014 sale.
Their 2002 Syrah used to sell for $90 a bottle, Witten-Hannah said.
"You're not talking about cheap plonk.
"There was a beautiful vineyard making beautiful wine.
"It's a bloody tragedy."
Witten-Hannah said the Chinese company had offered far more for the property than other prospective buyers.
At the time there had been considerable controversy about rich foreign investors buying sensitive New Zealand land.
Witten-Hannah was "delighted" the OIO had taken action as he believed the investors did not appear to have made any serious attempt to operate the vineyard.