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Foreign investment in Aotearoa/New Zealand
Overseas Investment Office - January 2023 Decision
Standing Consents
As you would expect, January was a quiet month for the OIO, being the holiday season with Government departments and businesses closed down or operating with a skeleton staff. So, there were only three Decisions that month, all involving forestry (interestingly, although the OIO sent CAFCA three Decisions in its monthly release to us, only two of them can be found in the OIO Website's January 2023 section. We queried that and received this reply from the OIO: "This Decision is on the 'Decisions in December 2022' section of the Website. Unfortunately, the Decision summary was not releasable until January". (For the record, that Decision was for Ponga Silva Limited).
But the accompanying letter to CAFCA from the OIO also included: "Notifications of transactions under a standing consent (Decision summaries for these standing consents have already been released and provided to CAFCA)" and listed multiple OIO approvals under standing consents for Fletcher Residential Limited, Neil Group Limited, Metlifecare Limited, Ryman Healthcare, and Endurance Capital Limited.
So, what is a standing consent? I wrote in Watchdog 153 (April 2020): "The most egregious use of the rubber stamp involves standing consents - a process whereby the applicant is given approval to buy a pre-agreed amount of land or make a pre-agreed number of purchases without having to seek OIO permission each time. In September 2019 the Minister for Land Information and the Associate Minister of Finance gave a standing consent to Japanese TNC Pan Pac Forest Products Ltd to buy up to 20,000 ha of yet to be identified sensitive land and to make up to 25 transactions before October 2022".
"That same month the Neil Group Ltd (owned by the Tiong family of Malaysia) was given a standing consent for up to ten transactions up to a total of 400 ha, by September 2022. In October 2019 the Minister for Land Information and the Associate Minister of Finance gave US-owned NZ Redwood Company a standing consent to buy up to 4,000 ha of yet to be identified sensitive land and to make a maximum of ten transactions by November 2023".
"Undoubtedly this makes for greater bureaucratic efficiency. As Linda Hill wrote, about one of these standing consents: 'This summary at least makes clear that the OIO needs to be kept informed about use of the rubber stamp - afterwards'. This practice sets a very dangerous precedent. Why shouldn't any regular applicant to the OIO apply for a standing consent? They could argue that if it's good enough for a few, why not for the lot?".
Standing consents have come in for mainstream media attention recently. "Overseas investors have scooped up more than $123m worth of land in the Auckland region since September last year (2022) under a pathway designed to encourage house building. The largest purchases were by Neil Group, a company registered in the Virgin Islands and reportedly owned by Malaysian and Singaporean investors".
"In November (2022), it notified the Overseas Investment Office (OIO) it had bought 13 hectares of land on Trig Rd in Whenuapai for $49m. The company is building a 300-house development in Whenuapai and the latest purchase will be turned into an industrial and business park 'supporting' the suburb. Neil Group controversially went to the Environment Court in 2019 to seek a ruling that would limit the noise generated by Whenuapai Air Base and prevent aircraft engine tests. On its Website, Neil Group outlines its strategy for obtaining land. It invites individuals or families with large land holdings to partner up with it in development projects for a share of the proceeds".
"The Whenuapai purchase was done under a previously obtained 'standing consent' from the OIO, which required the consent holders to notify the Office once a land purchase had been made. Investors who want to build residential developments can apply for consent under a pathway known as the 'increased housing test', but they are required to sell their holdings within a certain number of years".
"Another company that has made such an application was Fletcher Residential, which is 55% Australian owned, 13% USA owned and 5% UK owned. In December (2022), it notified the OIO it had bought 0.7 ha in Onehunga from Kāinga Ora for $7.6m. It's replacing State housing with 62 dwellings over three 'super lots'. At least 30 have to be 'affordable' KiwiBuild homes".
"It's not the only public land Fletchers has snaffled. It bought 4.27 ha of former quarry land at 100 Morrin Road in St Johns from Eke Panuku, Auckland Council's development arm. The price has been withheld under the Official Information Act. It's developing 204 dwellings, mainly terraced housing and apartments, to sell on the private market, but also 60 dwellings for retirees".
Different Rules For Retirement Villages
"Buying up land for residential development and carving off a slice for 'retirement living' is a trend that has emerged strongly within recent OIO notifications. That's because villages for retirees are treated differently under the rules, allowing overseas investors to continue to own and operate them. Fletchers has done the same thing in Rosehill, where it has purchased 4.9 ha for $36.9m, to be developed into 114 dwellings and another 60-unit retirement village. Retirement village operator Metlifecare purchased 8.6 ha of land on Jellicoe Rd in Pukekohe for $23m. It's owned by the €9 billion Luxembourg based EQT Partners Infrastructure Fund".
"Meanwhile, National Party housing spokesperson Chris Bishop has taken aim at overseas investment rules ahead of the 2023 election. He told a crowd of 300 investors at a New Zealand Property Council summit that it was 'just nuts that retirement villages have an easier ride'. Bishop announced he has submitted a bill that would change the Overseas Investment Act to give "build to rent" housing developments the same privileges as retirement villages. The bill would also give rented apartment buildings the same depreciation tax write-offs that commercial buildings have enjoyed under the law since 2020" (Stuff, 14/3/23, Jonathan Killick).
To give one example of a standing consent approval involving Neil Group: in July 2022, the OIO approved it buying a freehold interest in approximately 1.008 ha at 118 Prole Road, Omokoroa, Tauranga, for $2 million. "The Applicant was granted a standing consent based on the increased housing and non-residential use tests on 6 September 2019. This permits the Applicant to acquire up to 400 ha of residential (but not otherwise sensitive) land in up to ten transactions by 1 September 2022".
"This is the third acquisition of land under the standing consent. Under the standing consent the Applicant must increase the number of dwellings on the land, or undertake development works to support the increase in the number of dwellings and must divest all interests in the sensitive land within ten years of acquisition. The Applicant is undertaking a residential subdivision on the Land. The Applicant intends to subdivide the Land into approximately 19 new residential lots (single dwellings)".
This one was listed as the third approval out of ten, under the standing consent. Neil Group is listed as 80% Malaysian-owned and 20% Singaporean. Neil Group is owned by the Tiong family of Malaysia, who are very well known to CAFCA (check them out using our Website search engine). Their most notorious presence in NZ is via the Ernslaw One forestry company. If you want to view that in the current climate change catastrophe context, do a Google search for "Ernslaw One slash"1551 .
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