Farming in New Zealand

There’s been a lot of publicity recently about the interest of overseas purchasers in farming in New Zealand but who is really buying what?

The Who
According to the New Zealand Herald newspaper, the amount of productive New Zealand land in foreign hands is probably around 10 per cent – and growing.  An accurate picture of how much land is overseas-owned would seem essential to any debate on the pros and cons of foreign control over New Zealand land but attempting to measure foreign ownership is a mathematical puzzle complicated by joint ventures, leasehold deals and limited historical data.  It doesn’t help that until 1998 the NZ Government agencies thought it unnecessary to record land purchases made by overseas investors.

The forestry and wine industries are hugely important to the New Zealand economy and for over twenty years overseas investors from the U.S., Australia, Europe and China have been looking for opportunities.  Recently, Shangai Pengxin took a controlling stake in Synlait Farms Ltd., with 13 dairy farms covering 4,500 hectares in mid-Canterbury.  Pengxin is also reported to be buying the 13,800 hectar Lochinver Station near Taupo for NZ$70 million and German and American investors have been snapping up paddocks throughout Canterbury, Otago and Southland.

Close to 1 million hectares in plantation forests alone is in foreign hands, either in full ownership or management. In 2010, the Forest Owners Association reported that 317,000 hectares were overseas owned, with forestry investment and management firms controlling a further 654,000 hectares in leases.

In the wine industry, it is estimated that between 40 per cent of wine produced is ultimately owned by foreign companies.

Back in 2003, the Overseas Investment Office (OIO) was comfortable with an estimate that 1 million hectares of rural land was owned by foreigners.  OIO records show that from 2001 to 2013, a total 1.6 million hectares of freehold land changed hands in transactions requiring overseas investment approval. That’s more than 10 per cent of the country’s estimated 14.5 million ha of productive rural land.

But many sales are joint ventures or otherwise involve multiple parties, including New Zealanders. Though the overseas investor may have a controlling hand, the OIO calculates a “net” land area which is deemed foreign-owned – reflecting the percentage of the foreign stake in the purchasing company. According to the OIO, the “foreign” component of those 1.6m hectares in freehold sales comes down to 562,000 hectares.

Another complicating factor is that many sales involve land already in overseas hands or that overseas buyers become New Zealand citizens or permanent residents.  Then there are leasehold arrangements, where foreign companies may control and profit from long-term land use without full freehold rights.  Some 358 leasehold deals covering 707,500 hectares were approved from 2001-13,

Northland is hot property at present. The dynamics of dairy farming in Northland are undergoing the biggest shake up the sector has seen in 50 yearswith buyers coming into the region to take advantage of the comparatively cheap land.  Latest figures from the Real Estate Institute of New Zealand show the average cost per hectare in Northland was NZ$15,555 compared to NZ$49,000 in the Waikato and NZ$55,000 in Taranaki

It’s simple mathematics really. The price of quality dairying land is cheaper in this most northern district in New Zealand.  Blessed with a sub tropical climate guaranteeing long summers and mild winters, it’s a great place to relocate to and live and work.  Not to mention its abundance of coast line and outstanding natural beauty.

« Back to Market Reports