Posted on 3-3-2003
New
Zealand For Sale
From Sunday Star Times
(2/3/03)
Sales of our prime land to foreigners have soared in the past
five years.
Anthony Hubbard and Ruth Laugesen investigate the motives of
the
billionaires.
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
everybody."
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
buyer.
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
forest.
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."
PRIME SPOTS BECOME TROPHY PROPERTIES
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.
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