Safe, economically stable, ultra-scenic… what’s not to like?
Renowned for its sailing and big-game fishing, the Bay of Islands in New Zealand has long been a playground for the rich and famous. And now investors from Asia and further afield are circling the area’s turquoise waters in search of another big catch: some of the planet’s most sought-after beachfront property.
Safe, economically stable, ultra-scenic countries like New Zealand have traditionally been a favourite of foreign property investors, and the state of the country’s dollar – still hovering at a five-year low and expected to stay weak for some time yet – has only underlined that attraction of late.
But there are things that even money cannot buy. Beaches head that list and, with very few exceptions, the New Zealand government maintains these riparian rights in order to preserve public ownership and access.
A rare exception to this rule is Omarino, a private, gated community in the Bay of Islands where 17 north-facing home sites come with these coveted riparian rights pre-approved by the Overseas Investment Office.
New Zealand’s Overseas Investment Office (OIO) is the governmental body charged with regulating the foreign purchase of real estate. OIO approval is something foreign buyers must invariably secure in order to consummate any property sale along the country’s long, exquisite coastline. If a particular property touches “sensitive” land (essentially, land with ocean or lake frontage) and it exceeds 0.2 of a hectare in size, government approval from the OIO is required before that sale, to any overseas buyer, can be approved.
Properties at Omarino – which complements its beachfront real estate with a helipad and an exclusive clubhouse with a private jetty and 17 individual boathouses for easy yacht storage – don’t come cheap. Eight home sites remain and three are currently on the market, each ranging from 12 to 25 acres in size and priced from NZD 4.5 to 6 million (USD 2.9 to 3.8 million).
According to Jim Rohrstaff of Auckland-based broker Legacy Partners, however, the investment opportunity demands a modicum of speculation.
“At that price point, with the New Zealand dollar performing so weakly against major foreign currencies, these are honestly some of the best buys in worldwide luxury real estate, when you compare them to comparable first-world properties – the Hamptons, Hawaii – and consider the riparian rights,” says Rohrstaff. “Each home site has its own private bay, headland and/or commanding, grandstand views. There’s just so little property of this kind remaining anywhere in the developed world.”
While a project such as Omarino stands out from the competition due to its offer of riparian rights, it is indicative of the overall buoyancy of the market in New Zealand. Property values are soaring in the capital Auckland and the real estate market is strong around the country, especially in desirable locales such as the Bay of Islands and Queenstown, a hub for adventure sports on the country’s South Island.
Average home values across the country rose by 11.3 percent in the 12 months to August and 20.4 percent in Auckland, according to the latest figures from Quotable Value, a New Zealand government-owned property valuation service.
“Values in Auckland continue to rise rapidly at the fastest rate since mid-2004 with the market there continuing to be driven by high-net migration and lack of supply,” says Andrea Rush of Quotable Value.
Nearly 9,000 properties were sold across New Zealand in March 2015, the highest number for any month since May 2007, according to the Real Estate Institute of New Zealand. The median sale price in Auckland rose to NZD720,000 (USD470,000) in March 2015, from NZD637,000 (USD415,700) the previous March.
The surge is largely driven by inward migration by New Zealanders who previously lived overseas as well as foreign investors, but can also be linked to a chronic shortage of housing.
A lack of supply is doing little to dissuade investors from sniffing out opportunities in the country though. Stable and secure, and remote from much of the geopolitical and economic turmoil witnessed elsewhere in the world, the country is viewed by many as a sure thing. New Zealand’s property investment laws – which do not include a stamp duty or a capital gains tax – are also seen as more welcoming than those of Singapore, Hong Kong and other global investment hubs.
“Offshore investors are having an effect at all levels of the residential market,” says Layne Harwood, country head for New Zealand at analysts Knight Frank. “They’re here for the security of capital.”
“Money still goes a relatively long way in the New Zealand property market,” adds Michael Pleciak of Legacy Partners. “Things are hotting up, that’s for sure, but there’s still very good relative value to be found. That is highly appealing to a lot of international investors.”
A shortage of housing is certainly a major factor in the surge in property prices – especially in Auckland. Developers, however, are wise to demand growth. And with a number of exclusive projects coming online around the country, New Zealand’s reputation as a sound destination for investment seems certain to endure.
In central Auckland, SugarTree, a mixed-use development with 656 planned luxury apartments, is proving popular with foreign buyers from countries including Singapore and China, according to Darren Brown, the project’s director. Other notable projects, meanwhile, include Omarino, Te Arai, an exclusive adjunct to the new Tara Iti Golf Club around 75-minutes drive from Auckland and Te Punga Farm, a 900-acre parcel located east of Auckland on New Chums and Whangapoua beaches.
Back in Auckland, where housing stock is traditionally low-rise, developers have started construction on a number of luxury high-rise projects. According to analysts, these are proving particularly attractive to Asian investors. “There’s a perception that ownership of units in CBD tower buildings will generate rental return,” says Harwood of Knight Frank.
Not everyone is entirely comfortable with the emergence of New Zealand as a favoured market for overseas investment. Last year, Andrew Little, the leader of the New Zealand Labour Party called for a register of foreign buyers of New Zealand homes. Currently there is little data on how many properties overall are owned by domestic or offshore buyers. Such a register, proponents say, would lay the groundwork for controls on the housing market.
Despite these rumblings, analysts say there is little political appetite to place restrictions on foreign buyers. It seems, therefore, that this country of towering peaks, deep blue glacier lakes and shimmering seascapes – the backdrop for Peter Jackson’s cinematic JRR Tolkien adaptations – will continue to nurture real-life investment fantasies.
New Zealand choice properties
Developer: Craig Heatley
Completion date: Ongoing for next several years as buyers build homes, but amenities and infrastructure is complete
Pricing: Sites range from NZD4.5 million to 6 million (USD2.9 to 3.8 million)
Distinguishing elements: Stunning oceanfront/beachfront house sites of 14-20 acres that retain riparian rights. Located in the heart of the Bay of Islands and has the ideal north facing aspect and orientation. Jetty, four-bedroom guesthouse for owners and guests, helicopter pad and onsite boat storage
Developer: Willis Bond & Co
Completion date: mid-2017 for first residences
Launch price: Wynyard Central – one-bed from NZD565,000 (USD356,000), two-bed from NZD945,000 (USD596,000) and three-bed from NZD1.2 million (USD756,000) – 132 Halsey – two-bed from NZD2 million (USD1.26 million) and three-bed from NZD2.5 million (USD1.56 million)
No. of units: 164 (113 from Wynyard central and 51 from 132 Halsey)
*there will be more than 400 apartments when fully complete
Distinguishing elements: Waterfront location but within close proximity to Waitemata Harbour and CBD and close to restaurants and amenities in North Wharf, Silo Park and Westhaven Marina areas. 132 Halsey features concierge service, gym facilities, boutique movie theatre and business centre
Developer/Owner: Darby Partners/New Zealand Land Fund 2
Completion date: Community amenities will be complete April of 2016. First release of beachfront sites will be late 2015/early 2016
Pricing: Sites will range from NZD2 to 3 million (USD1.3 to 1.9 million)
Distinguishing elements: Te Arai will be home to nearly 100 sites situated along 11 km (7 miles) of perfect white sandy beaches with one of New Zealand’s best surf breaks, just an hour and 15 minutes north of Auckland. Home of the new private Tara Iti Golf Club designed by Tom Doak. Amenities will include beach club, hiking, biking trails, water sports/activities, diving and great fishing
Te Punga Farm, Coromandel Peninsula
Developer/Owner: Darby Partners/New Zealand Land Fund 2
Completion Date: Roads and infrastructure to be completed 1 January 2016. Homes will be built over the next few years.
Pricing: Sites will be priced from NZD1.5 million (USD968,000)
Distinguishing elements: Te Punga farm is the closest property to the famous New Chums beach, which has been named one of the top 10 beaches in the world. With 900 acres and just eight sites, this is a low-key paradise and holiday hotspot among New Zealanders as well as international travelers. The Coromandel Peninsula is renowned as an unspoiled destination on the East Coast with white sand ocean beaches, native bush and spectacular scenery