Agents from Colliers International are convinced recent changes to the Overseas Investment Act holds no threat to investment in forestry.
The agency's director of forestry, Warwick Searle, says the first sale of a forestry block under new Overseas Investment Office (OIO) regulations, signals that New Zealand remains open to foreign investment in the sector.
Stoneleigh Forest in Waikato has been purchased by Oji Fibre Solutions (OjiFS) — a New Zealand-based pulp, paper and packaging company part-owned by Oji Holdings from Japan, says Searle.
The 127ha freehold forestry block is just south of Te Kuiti and less than 120km from OjiFS's Kinleith Mill in Tokoroa.
It comprises 87ha of 25-year-old radiata pine that is pruned and ready for harvest. A further 37ha of radiata was harvested in 2017 and replanted last year. There are also small areas of minor species.
Searle, who brokered the transaction with colleague Angus Robertson, says it is the first forest to be sold to a foreign buyer under the new investment rules.
The Overseas Investment Amendment Act 2018, which came into effect on October 22 last year, introduced a new regime of three separate tests for buyers seeking to purchase forestry land or cutting rights.
OjiFS applied to the OIO for consent to purchase Stoneleigh Forest in early November.
The OIO granted approval late last month – the first consent to be issued under its new special forestry test criteria.
The special forestry test is the most streamlined in the OIO's new testing regime. It is aimed at foreign buyers looking to maintain forestry land under its current usage, or to convert rural land to forestry.
Searle says the landmark decision shows New Zealand is still open to foreign investment in forestry.
"Our forestry sector remains globally competitive and, crucially, it is backed by a regulatory regime that recognises the importance of overseas investment.
"It's particularly pleasing that the OIO processed OjiFS's consent application so quickly, delivering a decision in under four months. Under the previous regulations, consents typically took between nine to 12 months."
Searle says OIO consent for another significant forestry sale is expected shortly.
"After a period of uncertainty, it's great to see the OIO is on board with allowing this crucial investment to flow into the country. Overseas funds are not only key investors in New Zealand's forestry sector – they will also play a major role in helping to deliver the government's One Billion Trees Programme."
Searle expects more foreign investors to express interest in a substantial forestry asset of more than 4000ha, which is due to hit the market in the coming week.
"There is enormous overseas demand for highly productive assets, as New Zealand's forestry sector continues to experience significant transformation and growth."
He says to accommodate this growing demand, Colliers recently expanded its forestry capabilities, with the return of rural valuer and registered forestry consultant Angus Malcolm.
"By harnessing Angus' expertise in tree crop valuation, we can now offer integrated tree crop and forestry land valuation services, alongside forestry sales services," says Searle.
Malcolm, who has been involved with Colliers (either working with or alongside its agents) since 2012, is currently based at the company's Richmond valuation office.
Searle says, the forestry valuation team at Colliers has started the year at full capacity with several large forestry portfolio projects underway.