Investing In New Zealand
Why the International Buyer is Focusing on New Zealand
High Total Returns and Capital Gains
New Zealand property total returns are among the more attractive and obtainable anywhere in the world. As the recovery within the commercial and industrial property markets gather momentum all sectors are once again experiencing capital value gains according to the latest Investment Property Databank (IPD) indices. With the already attractive income returns available, these positive capital returns have pushed total returns back to double digit figures in a number of sectors.
Straight Forward Land Title System
New Zealand has an easily understood land title system based on the Torrens system of Land Registration. The Land Transfer Act 1952 provides for a public register of land, and transactions may be conducted in reliance on the register
With its well developed legal and trading systems, New Zealand provides a strong diversification option for property investors internationally in a balanced service, rural and manufacturing economy, in which many major international corporates are already invested.
New Zealand is a constitutional monarchy with a stable, democratically elected parliamentary government.
Stable Banking Sector
The financial system is sound and operating effectively, supporting growth in the economy. Bank capital, liquidity and funding buffers remain above required minima, while asset quality and underlying profitability are strong. Regulatory changes over recent years have helped to improve prudential standards for banks, non-bank deposit takers (NBDTs) and insurers. There has been continued progress in processing claims related to the Canterbury earthquakes, although significant uncertainties remain.
Reserve Bank of New Zealand: Financial Stability Report, May 2014
Corruption-Free, ‘Clean Green’ Image
New Zealand has a legal system similar to that of Great Britain, Australia and Canada. It does not have the added complication of separate state and federal laws. The judiciary is completely independent of Parliament. The political and legal systems are free from corruption and there is no civil unrest. The attractiveness of New Zealand as a place to live and work is becoming a key factor in sparking international investor interest. As many countries experience internal economic strife and uncertainty, investors are looking to New Zealand as a safe haven for both investment and lifestyle.
Welcoming Foreign Investment Policy
Foreign investors wishing to acquire commercial property in New Zealand can freely do so without the approval of the Overseas Investment Office (OIO) for most classes of property. For those properties requiring OIO approval, obtaining this approval has historically not been difficult to obtain.
There are no exchange controls effecting remittances to and from New Zealand. A free flow of capital in and out of the country is permitted.
No Stamp Duty or Capital Gains Tax
A passive offshore investor does not pay any stamp duty on purchase or capital gains tax in New Zealand on any profit made on the sale of a property.
Note: (1) These forecasts are made for the purpose of preparing forecasts of the New Zealand economy as a whole, and do not purport to be advice on which to directly base financial transactions.
Source: Reserve Bank of New Zealand, NZIER forecasts
At the time of writing, the New Zealand dollar was trading at approximately 66 cents against the United States Dollar, below the ten year average of 73 cents. Against the Australian Dollar the local currency is trading at approximately 90 cents which is above its ten year average of 84 cents. On a Trade Weighted Index (TWI) basis, the New Zealand dollar is around 70.
Over recent years the New Zealand Dollar has been trading above the longer term average exchange rate for the United States Dollar. Given that interest rates in New Zealand are likely to soften over the course of 2015 the medium term outlook for the New Zealand Dollar is for further reductions in its value on the foreign exchanges.
The New Zealand economy recorded a 0.2 percent increase in Gross Domestic Product in the March 2015 quarter. This follows a 0.8 percent rise in the December 2014 quarter. Retail trade and accommodation were the main drivers of the increase according to Statistics New Zealand, driven by increased spending from overseas visitors. Economic activity for the year ended March 2015 was up 2.6 percent.