'Perfect storm' for overseas investment in New Zealand business and real estate

New Zealand’s safe food-chain supply, a pending multi-billion dollar investment by the Chinese Government, and an overheated Australian property market are three key factors behind a rise in demand for New Zealand real estate assets by off-shore investors.

The ‘perfect storm’ of global social and economic conditions has arisen – totally independent from each other – from three separate global locations, and comes at a time when New Zealanders are becoming increasingly open to potential sale of domestic assets and land on the international market.

In response to requests from vendors to take Kiwi property marketing offshore, leading New Zealand real estate company Bayleys is compiling a portfolio of commercial premises, businesses, residential homes, and primary production land for sale to take on an extensive roadshow to South-East Asia, Europe and the UK.

Properties and businesses already participating in the Bayleys Global portfolio include tourism and hospitality ventures in Taranaki, the West Coast, and Central Otago, a farm in North Canterbury, two vineyards in Marlborough, a retirement village in Counties just south of Auckland, and residential homes in Auckland, Queenstown, Taranaki and Northland.

Bayleys principal David Bayley said the company had traditionally focused on UK immigrants to spearhead its Northern Hemisphere marketing activity. However, events of the past three months had created a new set of dynamics and opportunities – with demand following suit.

He said, ‘new generation’ factors were now underpinning the increasing interest in New Zealand real estate and businesses. Among those factors were:

Global financial Bible, The Economist, last month identifying the Australian residential property market as the most overvalued in the world – with the bubble estimated to be overinflated to the tune of 56 percent.
On the back of a continuing iron-and steel mining and production boom across the Tasman, property market commentators have been tracking double-digit growth in residential and commercial property values over the past three years while the rest of the world, apart from China, has been in recession.

With Australian residential and commercial property market values benefitting from nearby Asian investment, real estate analysts believe it is only a matter of time until large scale profit-taking sell-offs commence in Australia… and the resulting funds begin heading to New Zealand to take advantage of a favourable exchange rate.

China's enormous sovereign wealth fund, the China Investment Corporation, setting aside NZ$6 billion of its massive foreign exchange reserves to invest in New Zealand assets - including commercial buildings, companies and primary productions units such as farms and vineyards.

Growing safe food-chain supply concerns following the suspected irradiation of primary produce from Northern Japan after the March earthquake - which resulted in the World Health Organisation placing meat, leafy vegetables, eggs and milk produced in the region on a ‘danger list’.

Those safe food-chain supply concerns were further exacerbated this month with an outbreak of the killer e-coli virus across Europe which was traced back to vegetables contaminated by polluted water.

Both instances dovetail behind the 2008 Sanlu melamine milk powder scandal in China, which saw some 10,000 tonnes of infant milk powder recalled off supermarket shelves.
Mr Bayley said each of the demand factors on their own were significant.

“Combined however, they are enormous,” he said.

“New Zealand’s challenge now is to balance a controlled exchange of farms, commercial properties, home and businesses ownership in such a way that the best interests of the country are retained in the long-term, while the multi-billion investment opportunities we are now facing are used to continue in assisting to lifting New Zealand out of recession.

“Controls and measures for this are contained within Overseas Investment Office guidelines.
“In full compliance with OIO guidelines, properties featuring in our international portfolio are being simultaneously marketed extensively throughout New Zealand – giving New Zealanders every equal opportunity to buy.”

Mr Bayley said the Government’s internationalist policy of seeking investment in the New Zealand economy would assist in the company’s marketing drive. Properties for the international marketing campaign are currently being signed up – with some 26 already confirmed.

Bayleys’ international roadshow across immigration expo’s and property investment seminars begins in Zurich, Switzerland, on July 6 before taking on dates Leeds, London and Manchester. Company principal David Bayley is handling the South-East Asian section of the Bayleys Global campaign – with a promotional trip to Shanghai, Guangzhou, Singapore and Hong Kong scheduled for August.