Rich-listers such as Californian billionaire Ric Kayne have issued a warning to New Zealand - banning house sales to foreigners could hurt the country’s reputation and turn wealthy investors away.
Mr Kayne, who has built an exclusive golf course in New Zealand and wants to expand his investments, is one of several rich businessmen who claim the proposed new law will have unintended consequences. They’re seeking amendments to the draft legislation or its withdrawal in its current form.
“The vision we have for what we would like to contribute to New Zealand is now being threatened,” Mr Kayne wrote in submissions to a parliamentary committee examining the proposed law change. The new rules will “impact on us personally, and others like us who, having discovered this country, want to devote considerable resources to preserving, protecting and enhancing it.”
The new Labour-led government came to power in October on a pledge to fix a housing crisis with a raft of measures, including a ban on foreign speculators buying residential property. While data suggest non-residents have only a minor impact on the wider housing market, support for the move was boosted by headlines about rich foreigners buying mansions and farms in New Zealand as boltholes away from the world’s ills.
House prices have surged more than 60 per cent in the past decade amid record immigration and a construction shortfall. In the biggest city of Auckland, prices have almost doubled since 2007 to an average of more than NZ$1 million ($730,000). That has made it more difficult for first-time buyers to enter the market and driven up rents, leaving increasing numbers of poor people homeless.
“It’s really important for us that we sort our housing market out, that we give New Zealanders a fair go at buying their first home,” finance minister Grant Robertson said in an interview this week. While the country welcomes foreign investment, “what we want is good-quality investment that supports the productivity of the New Zealand economy,” he said.
The proposed law, which the government says will bring New Zealand into line with neighboring Australia, will classify residential land as “sensitive,” meaning non-residents or non-citizens can’t purchase existing dwellings without the consent of the Overseas Investment Office. While it allows non-resident foreigners to invest in new construction, it forces them to sell once the homes are built.
Eion Edgar, a millionaire businessman, told the committee that the law “will be detrimental to New Zealand’s international reputation and greatly restrict overseas parties contributing to the benefit of New Zealand".
He gave four examples of wealthy foreigners investing hundreds of millions of dollars in New Zealand after buying land here. They included Japanese businessman Eiichi Ishii, who bought and developed the Millbrook Resort near Queenstown, and singer Shania Twain’s ex-husband Robert "Mutt" Lange, who purchased large tracts of hill country on New Zealand’s South Island and placed most of it under protective covenants for public preservation.
Matthew Cockram, chief executive of Auckland-based Cooper and Company - owned by millionaire property investor Peter Cooper - said the law is “misdirected” and should be withdrawn. He said it could hurt projects that rely on foreign buyers, such as a high-end lifestyle development including a tourist lodge the company is building in the picturesque Bay of Islands.
It’s not just individuals complaining. Spark New Zealand, one of the nation’s biggest telecommunications companies, said the law could make it more difficult to buy land to expand its cellular network because the majority of its shares are held offshore. This will likely result in “less capacity and poorer coverage,” it said.
Mr Kayne, who made his fortune as a co-founder of investment firm Kayne Anderson Capital Advisors, opened the private Tara Iti Golf Club about 105 kilometres north of Auckland in 2015. Designed by Tom Doak and offering jaw-dropping Pacific Ocean views from every hole, Tara Iti debuted at number 6 on Golf Digest’s ranking of the World’s 100 Greatest Golf Courses.
In his submission, Mr Kayne said the course attracts high-yield visitors from around the world and provides jobs to the area. However, its economic viability is threatened by the new law because residential homes and guest cottages being built as accommodation for members and visitors won’t be able to be sold to foreigners.
“It is necessary for the economic outcome of the development that these properties are able to be sold to an international purchaser pool,” he said.
Mr Kayne, who plans another golf course of similar quality that will be open to the public, said he will also be forced to sell the house he’s building for himself and wife Suzanne under the new restrictions.
Although he is a New Zealand resident, the legislation would not recognise him as one because it requires people to spend at least 183 days a year in the country - something his business interests prevent him from doing.
“Part of what attracts people like us to New Zealand is the warmth and openness this country displays to visitors and newcomers,” Mr Kayne wrote. “I would hope that amendments are able to be made which provide some discretion and flexibility for persons like me.”