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Foreign investment in Aotearoa/New Zealand

Overseas Investment Office - March 2023 Decisions

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IKEA Buying Up Land For Forestry

For a number of years now there has been much hype about Swedish furniture giant IKEA building a store in NZ from which to sell its signature flatpack furniture. That hasn't happened yet but it finally broke ground on a site in Auckland's Sylvia Park in June 2023 and expects it to be open by the end of 2025. However, its investment wing has already been systematically making purchases of a different sort in NZ, and three of them appear in the March Decisions.

Ingka Investments Forest Assets NZ Limited and Ingka Investments Management NZ Limited Netherlands (100%) "are two New Zealand incorporated companies who will acquire the Land, and hold a forestry right over the Land, respectively. The Applicants are owned by Ingka Investments BV, the investment arm of Ingka Group, which is the largest franchisee of IKEA stores internationally".

These two companies got OIO approval to buy:

• approximately 379.7 hectares at 6 Tinui Valley Road, Tinui Valley, Masterton, Wairarapa for $2.8 million from Tunakino Forestry Limited New Zealand (100%). "The Land is currently used for forestry and silvicultural purposes. This is a second rotation forest and was established between 2012 and 2015. The Applicants plan to continue operating a commercial plantation forest on the parts of the Land suitable for planting. Once harvesting has been completed, the Applicants intend to replant approximately 379.7 hectares (more or less) of the plantable area in Pinus radiata or similar species".
• approximately 597.4084 hectares of land located at 40 Whyte Road, Happy Valley, Southland from Diane Mary Gill and Neil Thomas Robinson as Trustees of The Gill Family Trust (New Zealand 100%) for $9,305,000. "The Land is currently in use as a sheep, beef and deer farm. The Applicants plan to establish and maintain a total of approximately 535.2 hectares of rotation forest over the 2024/2025 planting seasons. The trees will be harvested after approximately 27 to 30 years, and replanting will occur following harvest. The Applicants intend to subdivide and sell three hectares of the Land containing two residential dwellings and curtilage" (curtilage = an area of land around a house and forming one enclosure with it). "The Applicants have been granted consent under the special test relating to forestry activities set out in (the Overseas Investment) Act".
• approximately 606.8325 hectares of land located at Porangahau Road, Wallingford, Central Hawke's Bay from James Gareth Dunkerley and Somerville Dunkerley Trustee Company Limited as trustees of the Gareth Dunkerley Family Trust (New Zealand 100%) for $9,925,000. "The Land is currently in use as a sheep, beef and deer farm. The Applicants plan to establish and maintain a total of approximately 416.9 hectares of rotation forest over the 2024/2025 planting seasons. The trees will be harvested after approximately 27 to 30 years, and replanting will occur following harvest. The Applicants intend to subdivide and sell 131 hectares of land, being part of the Land containing a residential dwelling (two ha) and part of the Land better suited to farming (129 ha). The remainder of the Land will be unplanted, including native bush (17) hectares, buffer land, setbacks, riparian areas, roads and tracks".

This continues a pattern of IKEA land purchases for forestry. In 2021 it bought 5,500 ha of farmland for forestry plantation. "The property, Wisp Hill Station, is located in the north Catlins in Otago. An area of 330ha will be planted with radiata pine seedlings and the long-term plan is to have a total of 3,000 hectares, more than three million seedlings, planted in the next five years".

"The remaining 2,200 hectares would be left to naturally regenerate into native bush. The first planned harvest will take place 29 years after planting at the end of the first rotation. A lease back requirement would allow previous owners, the Ward family, to properly phase out their operations over a minimum three-year period".

"Ingka Investments Managing Director, Krister Mattsson, said responsible forest management created jobs and supported the local economy. 'Having a good impact in the neighbouring communities is an important part of our approach to responsible forest management. We will work closely with the former owners of the land and with local forestry specialists to prepare the land for a new forest to be harvested in 25 to 30 years. We will also work closely with the local iwi on how to best manage the land that will regenerate to native bush', he said".

"Between September 2019 and August 2020 Ingka Group planted close to seven million seedlings across its entire forestry portfolio around the world. Last year (2020), Ingka Investments started to increase focus on afforestation, the creation of new productive forests, by planting trees in areas where there were none, in Latvia and Estonia. Ingka Group currently owned about 248,000ha of forestry in the US and Europe (Estonia, Latvia, Lithuania and Romania)" (Stuff, 16/9/21, Bonnie Flaws) Other purchases were made throughout 2022 and 2023.

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