More urban land than rural foreign owned

The idea that New Zealand was passing into foreign hands is a myth according to Terralink managing director Mike Donald.

The Sunday Star Times (not online) reports that 280,000 hectares of rural land has been consented for sale over the last seven years.

That’s less than 1.5% of the country’s total rural land and most of it has been bought by people or organisations based in the USA, Britain and Israel.

Furthermore the amount of productive land bought by foreigners each year has dropped sharply over the last decade.

Overseas Investment Office figures show 15,242 hectares of farming and forestry land was consented for sale to foreign buyers in 2011, significantly down from the 48,828ha in 2001 and the least since 2007. The total combined area of the Crafar Farms was 7900ha. Rather than the nation’s dairying being put up for grab, it was commercial and industrial land that outstripped other categories.

Nearly 5 per cent of all industrial land in New Zealand has been consented for sale to overseas person or entities.

It isn’t clear if that includes land already owned by foreigners or whether it was all sales of land owned by New Zealanders.

Whichever it is, that’s not a big area of rural land which highlights the stupidity of Green co-leader Russel Norman’s Bill to prohibit the sale of “sensitive” land to foreigners.

He defines “sensitive” as anything more than .05 square kilometres (about 12 acres) but the figures show that if there’s a problem with too much land in foreign hands, it’s with urban land, which is sold in smaller parcels, rather than rural which is usually sold in larger blocks.

Why would it be alright to sell a horticultural property or lifestyle block to foreigners but not a livestock or cropping farm? Why is farmland more sensitive than land for factories, housing or shops?

That said, Donald does point out there could be grounds for concern if consents for sales of farmland to foreigners continue at the same rate as they have been over the last seven years.

The discussion then shouldn’t be on how much land an individual foreigner can buy but how much land in total should be owned by foreigners.

I don’t have any concern about less than 1.5% of farmland being in overseas ownership and I would be opposed to a blanket prohibition of farm sales to foreigners. However, I can see cause for concern if too much land was in foreign hands.

Quite how much is too much is a matter of debate and it would be far better if the effort was put into determining that rather than banning foreign ownership of farms outright.

 

 

3 Responses to More urban land than rural foreign owned

  1. JC says:

    My guess is these figures exclude land sold foreigner to foreigner, and those can be quite large transfers. However, as the land has already been alienated it shouldn’t be counted twice.

    How much land alienated is too much?.. technically it doesn’t matter who owns it provided it continues to produce as well as it did in NZer control.. the profits can’t be exported, only redistributed into NZ land, goods and services.

    On that last point there’s some info out there that foreigners make better local investment decisions than NZers do.. probably a function of superior knowledge as to what sells best overseas, and perhaps better marketing skills too.

    JC

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  2. Richard says:

    Ele
    “However, I can see cause for concern if too much land was in foreign hands.”
    I do not share this concern. Buyers are rational or stupid.Rational commercial buyers wish to make a return on their investment if they do not they will sell. Perhaps your concern is profits being transferred over overseas?
    Interested in what your view is

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  3. homepaddock says:

    JC – I know a couple of foriegn investors who lost a lot (more than $1m each)but that was a shareholders in farms with majority NZ ownership and poor governance and managemet.

    Richard – it’s not the profit that would go overseas that worries me, those foreign investers I know have spent far more than they’ve recouped so far and any profit is putback into their farms.

    As JC points out, profits can’t be exported. The only place $NZ can buy anything is here.

    It might be more emotional than logical but I’m uncomfortable with the idea of a large percentage of our property being owned by people who don’t live here.

    Some foreign investment in land is good but I’m not convinced that lots would be better.

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