Scoop | July 11, 2011
NZ missed out on global land grab, NZIER says
July 11 (BusinessDesk) – New Zealand’s relative isolation and high-priced property means the nation has missed out on a global grab for land, especially farms, despite rising public disquiet about such sales, the New Zealand Institute of Economic Research says.
Foreign holdings on New Zealand land amounted to $4.8 billion, or 1% of the total, in 2009, the research body said, citing Statistics New Zealand figures. Foreign ownership of manufacturing, by contrast, was $27 billion, or 9% of the total, while finance and insurance towers above at $192 billion, or 61%, reflecting the Australian-owned banks and insurers.
According to Overseas Investment Office figures, the net number of hectares of land sold to foreigners fell in 2010 to 17,040 from 22,345 in 2009 and down from a spike of 198,346 hectares in 2006 when Carter Holt Harvey sold its forests.
“New Zealand has not been part, to any great extent, of the international trend in foreign land acquisitions,” NZIER said in its report. The country is “atypical” given land is relatively expensive, it is a long way from major markets and the food produced is typically different to what has been targeted in agriculture-related foreign investments elsewhere.
Should commodity prices remain high, however, then potentially protein-based investments could increase, it said.
Despite the sometimes xenophobic fear of investment by Chinese-investors, Australia is the largest contributor to total FDI, with investments worth $47.3 billion, with the U.S. second at $10.62 billion. The Netherlands accounts for $3.8 billion, the U.K. $3.5 billion and Japan at $2.15 billion.
NZIER said a more important question was why less focus was given to the sale of New Zealand companies to foreigners rather than land, such as rural services firm PGG Wrightson Ltd., which is now controlled by Agria Corp. and China’s New Hope.
“It has been overseas entities with stronger business plans, a long-term view and finance” that have looked to capitalise on the opportunities that have emerged, NZIER said.
Lack of domestic capital appears to be holding back local entrepreneurs, which can be traced back to the low level of savings by New Zealanders, it said.
(BusinessDesk)
