UK investors keen for slice of rural New Zealand

New Zealand rural property is seen as a safe option in uncertain times. Photo / Supplied

Lack of faith in global banking and financial institutions is driving wealthy British farmers and institutional money managers to look at large scale investment in New Zealand's rural sector.

One of Britain's biggest agricultural and rural property companies, Smiths Gore, has entered into a working alliance with Bayleys to channel millions of pounds of UK investment funds into Kiwi rural properties.

The Smiths Gore relationship is one of a number of international alliances that Bayleys has established. Compass Immigration, a specialist consultancy firm for people wanting to move here, will be sharing a stand with Bayleys at this year's Opportunities New Zealand Expos in London and Manchester in October.

A UK special edition of Bayleys' Preview magazine will be printed for the expos and will include residential, lifestyle, waterfont and tourism properties as well as businesses for sale.

Smiths Gore has some 810,000ha of rural land under management in the UK, acting for private and institutional clients, public sector bodies and charities. With 25 offices, the company delivers a full service for rural investors - from locating suitable farming properties and setting up finance, through to supplier contract negotiations and farm management.

Smiths Gore partner Giles Wordsworth said the partnership with Bayleys would provide a direct access for British funds to invest in New Zealand's rural property sector, at a time when land values here had fallen considerably off their peak of two years ago and were now becoming more attractively priced from a purely investment perspective.

"UK farm values have fallen from 2008, but not to the extent they have in New Zealand. This has created an investment disparity which many of our clients have expressed an interest in taking advantage of, said Wordsworth, head of Smiths Gore's National Farm Agency.

"Lesser quality farming units in the UK are now comparably priced to good quality farming units in New Zealand. However, your market has considerably more long term uplift potential than ours, and with the added benefit of being part of a globally diversified portfolio, they are becoming increasingly more attractive.

"For decades, English agricultural and horticultural investors have been buying productive rural property British investors looking for slice of rural New Zealand around the world - such as in Kenya and Zimbabwe, and more lately in Chile for its wine production and Argentina for its beef herds. With Bayleys' extensive New Zealand network of farming contacts and property listings, we are confident of putting together a sizeable portfolio of rural real estate to present to our clientele.

New Zealand has long set the rural production benchmarks that many British farmers admire."

To support the UK marketing initiative, Bayleys is undertaking an eight-centre country property roadshow in October this year - with the specific aim of selling New Zealand farms to English, Scottish and Welsh investors.

As well as presenting properties to large-scale rural investors, Bayleys in conjunction with law firm Wynn Williams and the National Bank of New Zealand, is running seminars for UK farmers wanting to relocate to New Zealand to take advantage of our agricultural and lifestyle opportunities.

Bayleys Country manager, Richard Graham, said the company was currently compiling a Country magazine portfolio of New Zealand farms, vineyards, and horticultural blocks to showcase not only at the roadshow seminars, but also to Smiths Gore's extensive investor database.

Bayleys sold $135 million of property from its spring 2007 Country magazine, and $106 million worth of country property from last year's publication.

However, Wordsworth cautioned that Kiwi rural property vendors should not build up unrealistic price expectations for their farms in the hope of making a quick buck from investors on the other side of the world.

"Our clients are extremely astute when it comes to land pricing and the operational structures of the farming business they are buying. They are highly discerning when it comes to investment, and certainly won't be throwing around funds without clear advice and input from professionals such as Bayleys," Wordsworth said. "However, they are aware of the market conditions and as a result, are prepared to pay fair market value for properties. We manage many investment holdings and our typical UK investors would buy the productive unit as a going concern - sheep and beef, dairy, arable or viticulture - then put in local management to run the operation. This local management is often the previous owner, who is guaranteed an income from the land yet is free from the restraints and concerns of funding the business.

"The world is becoming a much smaller place to conduct commerce. For example, technology and communications now allow for the day-to-day operations of a farm in Matamata, to be viewed and managed in 'real time' by an owner in Yorkshire," Wordsworth added.