Posted on 3-3-2003

New Zealand For Sale

From Sunday Star Times

Sales of our prime land to foreigners have soared in the past five years.
Anthony Hubbard and Ruth Laugesen investigate the motives of the

Overseas buyers thirsted for
Knuckle Point, an emerald headland set in the blue waters of Northland.
Pat Durham says he could have got $5 million for it, but he didn't want
another local treasure to go to a foreign tycoon. Instead, he sold it to
the government for only half as much. "I had people standing by in
Seattle waiting to fly in if the deal with DOC didn't go ahead," says
Durham, a spokesman for the Kauhoehoe family trust that sold the land.

Money was no object. But money, says
the businessman - he spent years overseas making his own fortune - isn't
everything. "I've seen more and more of the land along this coast being
bought by offshore people and prices are going crazy. And what we're
seeing is all of a sudden there are gates and fences and signs saying ONo
Admittance, Private Property'. "We shouldn't have to be having to guard
our country and say, Olook, this is mine, you can't go there'. "I know in
certain properties local Maori who have been walking across to their
favourite fishing spots for hundreds of years are being denied access.
They're saying, Owell, look, you know, can't we just walk through?' "And
they were embarrassed to ask because the answer might be, Ono, I own this
and I don't want people here'. So it starts to fracture a very
fundamental lifestyle of the Maori community."

The government-owned nature heritage
fund paid $2.7m for the 378ha Paeroa block at Knuckle Point on the
Karikari peninsula - a popular place with foreign buyers. Americans Paul
Kelly and Bob Haig own the 1420ha Carrington golf resort and farm complex
nearby. Another wealthy American said to have invented a storage tank
safe from a nuclear blast lives here too. Paeroa, though, will stay Kiwi,
as a new scenic reserve managed by the Conservation Department.

Few issues engage New Zealanders more
deeply than the sale overseas of scenic and historic treasures - "trophy
sites" as Conservation Minister Chris Carter calls them. There was a huge
public outcry last year when New York tycoon John Griffin bought Young
Nicks Head on the East Coast. But it seems likely that more and more of
these taonga will be sold overseas - and a groundswell of opposition is
now building. There will be a mounting wave of overseas buyers, says
Durham. "It's absolutely clear. It's not a guess, it's not a maybe, it's
an absolute reality: we are going to see an exponential curve in demand.
"I'm seeing young people coming into really amazing spots that no one
went to before, from Germany, Austria, America, Brazil. And some of the
people are already well connected and are thinking, Owell how can I buy a
bit of land'?"

Overseas buyers often outbid the local
millionaires - and even the government. The nature heritage fund has
about $8m a year to spend, says Forest and Bird president and fund member
Gerry McSweeney, and it's just not enough. "We are up against huge
increases in property prices in the high country and on coastal
properties, driven by overseas buyers." The fund spent a quarter of its
annual budget on Knuckle Point - and succeeded there only because the
family trust that owned the land was prepared to drop the price far below
market value.

A determined foreign tycoon can easily beat the trust. Late last year it
lost a bidding war with American billionaire Julian Robertson for a prime
slice of the South Island high country. He paid $6.7m for Brooksdale
Station, says McSweeney - "three times the market price. He was in direct
competition with us". Both sales involved landscapes of great emotional
value, emblems of the New Zealand identity. "Sea coasts to northern New
Zealanders are in many ways what mountains are to southern New
Zealanders," says McSweeney. "It is the epitome of wilderness, headlands
with ancient pohutukawas and rocky bluffs. It's seen, even though it may
not be legally, as the wild spaces which are available to be enjoyed by

Knuckle Point, says Chris Carter, is an
unspoilt headland and a place of great value to Ngati Kahu. This rocky
coastline - with its kanuka and pohutukawa forests and its intimate
beaches - is said to have been a favourite of Kupe, the legendary
discoverer of New Zealand. Carter worries the price of these sites has
been increasing sharply, "severely compromising" DOC's ability to buy.
Knuckle Point was a good example. "The internet has made little slices of
paradise in New Zealand instantly available in an office in Boston or
Frankfurt," he says. McSweeney says reserves such as Knuckle Point
"remain a preserve for ordinary New Zealanders in the face of almost
annexation of the wild and natural coastline which is in private
ownership, and which is then developed into these exclusive resorts". "I
thought Knuckle Point was important, but it's almost tokenism in that the
scale of change is so rapid that we just can't hope to purchase a
fraction of these properties that are coming up. "The rate at which
natural headlands are disappearing is far in excess of anything we've
been able to achieve through things like the nature heritage fund."

The trend to foreign ownership also
meant "you're ending up with an enormously unequal society. In Northland,
you have got the marae and tangata whenua housing in the bay, overlooked
by a multimillionaire's house up on the headland. That's a formula almost
for revolution in some ways. There's this extraordinary (division) of
housing quality that's occurring".

How big is the problem? Overseas
Investment Commission chief executive Stephen Dawe thinks it's no big
deal. "Quite frankly, it's a beat-up on the part of the real estate
industry to try and talk prices up. If you look at all the comments about
foreigners buying islands or buying coastline you normally find it's real
estate agents who are doing that." Neal Prentice, of Bayley's Real
Estate, whose glossy Waterfront sales guide promises to bring New
Zealand's "finest (coastal) properties to the world", says foreign buyers
form only a small percentage of the market. In 1997, says the commission,
about 1100ha of coastal land was approved for sale to foreigners. Last
year, the figure was nearly 2900ha, more than twice as much. The total
for the six years was 10,700ha, or 0.18% of the coastline. The figures
need to be treated with caution. Some "coastal" applications for OIC
approval include a large property with only a small portion next to the
coast, so the actual area of foreshore is overstated. And some pieces of
land may be counted more than once, because it has been the subject of
more than one application. The figures are about approvals, not what
actually went ahead.

The total amount of coastline sold to
foreigners may not yet be large, say the critics, but the trend is
clearly rising. And OIC figures do not include all sales of coastal land
overseas. No permission is needed if the land is less than 0.2ha, or
about half an acre. And land that is on the beachfront but across a
public road is not considered foreshore land. A foreigner could buy up to
5ha of that land without needing the commission's go-ahead. McSweeney
says this means large stretches of coastal land with a road along the
foreshore - such as the Kaikoura coast or Punakaiki - are open to foreign
ownership without OIC permission. "The development occurring immediately
behind the road can be drastic." What's more, the word is getting around
that New Zealand offers beautiful scenic spots at prices that are cheap
by international standards. The tycoons are telling their wealthy
friends. Julian Robertson, for instance - the former hedge fund operator
once known as the Wizard of Wall Street - fired up his friend John
Griffin about New Zealand. And Griffin came down and bought Young Nicks
Head. And some are getting a taste for New Zealand. Robertson, who
developed the exclusive Kauri Cliffs golf course near Kerikeri, is
building another golf course and lodge near Cape Kidnappers in Hawke's
Bay. He has also bought three vineyards. Foreigners who already have
substantial investments in New Zealand are more likely to get OIC
permission to buy coastal land.

The ripples run wide. Paul Kelly, the
American co-owner of the Carrington Club, bought a 149ha property in
Waikawau Bay in the Coromandel and gave it to Auckland University. Last
week the government paid $3.54m to buy it after strenuous negotiations
with the university. It seems clear that only political pressure
prevented the university from selling it for a higher price to a private

Critics don't like any of this. Why, as
Campaign Against Foreign Control spokesman Murray Horton once put it,
should foreigners be able to cherry-pick our best sites? But others,
including environmentalists, have a different view. Environmental Defence
Society president Gary Taylor says: "In general, wealthy foreigners are
better custodians of New Zealand's environment than New Zealanders are,
sadly. Many of them have the resources so they don't have to subdivide
and develop land. And many of them are often engaged in large-scale
restoration programmes as well, because they have the resources and the
inclination to do that. So I don't have a kind of xenophobic view." The
society, for instance, opposed the American-owned Carrington Club
development on the Karikari peninsula and took it to the high court. "But
we settled because they were prepared to accommodate the sort of
environmental concerns we had," says Taylor. "It's essentially a golf
club development - it's not actually on the beach, so they've left the
coastline intact. And they've embarked on a programme of native
restoration around the golf course and we're reasonably happy with that."
The Carrington farm, he says, "is the single largest employer on the
Karikari peninsula. It is employing local Maori" in an area of high Maori
unemployment. "You can't argue it isn't a good thing for the community."

Even Taylor, however, worries that
foreign buyers seem to be inflating coastal values "beyond the reach of
the government when it looks to add reserve land to the crown estate". He
thinks the nature heritage fund should have a larger budget. Muriwhenua
leader Shane Jones says there is tension and division among northern
Maori over the issue. "Any hapu will be divided," he says. "There will be
those who live in these isolated areas who welcome the opportunity if the
Americans are investing fresh capital and setting up enterprises and
developing businesses. "And there will be those who see either a way of
life or perhaps our heritage slipping away. And it's fair to say that I
couldn't imagine anywhere where those two elements wouldn't be present."

The Overseas Investment Commission
openly favours proposals that involve economic development of land. A
foreigner who wanted to cover a headland in native trees, says Dawe,
might well fail to meet the commission's criteria. "You could end up with
all the country planted in lovely native trees, and it's not particularly
good for economic development. There aren't that many applications that
involve environmental development."

There are, of course, plenty of rapacious New Zealand landowners, just as
there are eco-conscious foreign buyers. Some, however, worry that
foreigners often view the landscape in a very different way from New
Zealanders, and have different attitudes towards issues of public access.
When Tommy Suharto, the son of the Indonesian dictator, owned the
Lilybank high country station, "trampers and hunters were repeatedly
denied access or were charged for access", says Forest and Bird's Eugenie
Sage. Alan Trent, a wealthy Californian who is now a New Zealand citizen,
has caused a furore in Ruby Bay in Tasman by bulldozing a cliff to make
way for a mansion. He also plans a large-scale housing development there.
For Pat Durham, the argument goes far deeper than economics. The family
trust that owned Knuckle Point originally wanted to develop "eco-blocks"
where at least two-thirds of the property would be planted in native

Owners could not put up fences or
"keep-out" signs and there had to be public access to the beach. "We were
seeking to stop, dare I say it, the Americanisation of these lots."
Skyrocketing property prices - rising between 25 and 35% a year - are
sending rates skywards. Locals were facing "a lot of stress and a lot of
pain just to stay where they should rightfully be." For many people,
especially older ones, "their souls belong in the property they live in."


In the north, alabaster beaches and
lonely headlands have become trophy properties for millionaires. In the
south, it is the heartstoppingly beautiful high country farms, with their
rolling tussocks and snowy backdrops that attract buyers half a world
away. Fully 10% of these high country farms are now in foreign hands,
according to research by the Royal Forest and Bird Protection Society and
the Campaign Against Foreign Control of Aotearoa.

But the behaviour of some of the new
wave of owners has led to calls by forest and bird for a moratorium on
any new sales of high country land to foreigners. Those complaints centre
around degradation of the environment, more intensive development of
land, and a culture which in some cases has shut out trampers and hunters
from private land. "It's such iconic landscape. We let it go for a while
to see . . . given that lessees do have some property rights. But it's
just going abysmally wrong," says Forest and Bird regional field officer
Eugenie Sage. For some North American owners, tussock-covered hills can
seem barren and empty. Douglas fir plantations are planted to remind them
of home. In other cases, the deeper pockets of the new owners mean farms
are developed more intensively, with wetlands drained, more fencing and
more cultivation of land. But these more intensive farming practices are
destroying tussock lands. And by helping push up land values, the new
owners are making it harder for New Zealanders to buy and run leases.
Higher debt loadings on the land, claims Forest and Bird, encourages New
Zealand owners to "push the land harder". At Coleridge Downs, close to
Lake Coleridge, kettlehole tarns, wetlands and tussock and shrublands had
been compromised by extensive forestry, cultivation and farm development.
All that is left of the old habitats are "exotic grasses and large
Douglas fir pine plantations".

Not all owners are creating problems.
Some had formed good working relationships with the Department of
Conservation, said Sage. Bryce Johnson, director of Fish and Game New
Zealand, says foreign owners sometimes misunderstand New Zealand's unique
laws relating to fisheries and wildlife. Here, the law says that "species
that are hunted and fished recreationally shall be a part of the commons
- they shall be available to the public". But in America and many parts
of Britain, farmers could sell hunting and fishing rights on their
streams and rivers.

Meanwhile Rural Affairs Minister Jim
Sutton has set up a working group headed by Mt Peel farmer John Acland to
try to sort out the problems of public access, arousing complaints by
farmers that their property rights may be eroded.