So you’re a one-percenter looking to escape the oncoming global apocalypse by hiding out in a luxury NZ bolthole. Who you gonna call? Peter Newport meets the fixers behind the super-rich influx and looks at how the newcomers are settling in.
There’s been a lot of international media attention on the attractions of New Zealand as a fashionable place for billionaires to escape the various meltdowns in the Northern Hemisphere.
But how exactly does the Kiwi system work? Who do they call? And what are the deals that typically get struck to secure land, houses, residency and even some new, local friends?
Well, it turns out the first call is often to a specialist lawyer. The lawyer’s job is to help smooth the way with the Overseas Investment Office, if there is significant land involved. They’re also there to help with all of the other practicalities: buying a house or houses, fitting into a new community, getting the kids into school, local business connections, and even how to contribute to some important local projects that could do with a bit of cash.
These special lawyers exist in Auckland but are particularly busy in Queenstown, which has become a Grade A target destination for distressed or disenchanted ultra high net worth individuals.
Elliot Goldman is just one of these fixers who have become experts at navigating the subtle complexities of business life in New Zealand. His clients often want to keep their profile low or even invisible but he also believes they, somewhat paradoxically, want to fit in and be welcomed.
Goldman himself was born in Palmerston North, but grew up in Canada, where his first career was as a professional ski instructor. He then came back to NZ and “discovered that ski instructing was actually good preparation for practicing law”. He now heads Goldman Legal in Queenstown, one of a number of local law firms that overseas millionaires and billionaires can contact if they dream of owning a big chunk of our country – or even something more modest.
He’s virtually the first point of contact for these people, so I wondered if Elliot Goldman saw himself as a gatekeeper. Would he refuse to do business with a prospective wealthy migrant who he felt was dodgy or undesirable? Goldman says he’s obliged to stick within the law but can’t refuse to act for someone just because he does not like or trust them. “It’s the cab rank rule” he explains. I’ve never heard of this in spite of reading many John Grisham novels. Apparently it means that lawyers pretty much have to represent any client that approaches them because that’s their job.
I asked the OIO how it all works after the wealthy New Kiwis have been groomed and prepared by their specialist lawyer. Is it about cash or character? What deals get done?
“It’s all on our website” was pretty much the response. And it is.
You could write a book about these Overseas Investment Office statistics, but here are the headlines.
First the figures relating to all overseas investment, not just land. Between January and December 2016, $4.4 billion (net) was invested into New Zealand by non-residents.
Below is the amount of land involved. Note that 362,132 hectares equals 3,621 square kilometres which is over three times the size of Auckland or around two thirds of the size of all New Zealand urban areas combined, according to Stats NZ. This OIO table does not include a further 103,000 hectares, just over 1,000 square kilometres (another Auckland), of lease or Crown land.
And here’s the number of applications declined.
“Just to apply to the Overseas Investment Office costs up to $40,000,” says Elliot Goldman, making the point that this is not a process for the casual enquirer. He handles immigration as well as investment cases, and both can involve large amounts of money changing hands. On the immigration front Goldman makes the observation that $1.5 million does not get anyone very far these days and he observes “at that level you are still stuck on the points system. $3 million to $4 million is where the investment category of immigration starts to make sense.”
These different Government immigration investment schemes for the wealthy get more relaxed as the dollar amounts approach $10 million. But one aspect of these schemes that some people may not realise is that the investments remain the property of the migrant, along with any interest or capital gains. It’s not a donation.
Elliot Goldman makes the point that the way New Zealand links investment with residency is very similar to other countries like Canada and Australia which are also trying to attract wealthy immigrants.
But the situation gets even more interesting when it comes to the relationship between cash and our new neighbours feeling comfortable in their new, often part-time, Kiwi home.
Elliot Goldman handled the case of Lim Mee Len and David Chuang, a mother and son from Singapore who wanted to buy some sensitive land near Queenstown last year. The agreement with the Overseas Investment Office involved a $100,000 donation to the local Wakatipu High School “to buy laptops and iPads.” The deal attracted media attention and the PM of the day, John Key, explained that this was only one of 16 similar deals since 2009 that had involved a donation to “some type of community project.”
Even the real estate agents in Queenstown are actively part of the same network. Nick Horton runs Luxury Real Estate which focuses on very high end properties in Queenstown and the Bay of Islands. Nick agrees that supporting community projects is a good way for overseas investors to satisfy the letter and the spirit of our overseas investment laws. “Conservation projects are popular” he says, “especially things like controlling wilding pine trees”. Nick explains that many extremely wealthy overseas clients feel that on the conservation front the “horse has already bolted” in many of the countries where they currently live and “it’s not too late to make a difference in New Zealand.” Let’s hope he’s right.
I checked with the Queenstown Lakes District Council on the number of overseas ratepayers. It’s now at 9.82% compared to 8.6% less than 12 months ago, almost a 14% increase. The latest figure represents 2,201 overseas ratepayers out of a total of 22,400. But the real figure could be double that or even higher as lawyers like Elliot Goldman often end up being the local address for rates as well as becoming a director of the companies set up by new wealthy migrants. The QLDC system only picks up overseas addresses for the rates bill, not overseas owners. The irony of course is that the more expensive the house the more likely it is to be empty for much of the year.
One of the most respected and prominent of Queenstown’s specialist lawyers is Graeme Todd. He’s acting for the NBC Today show host Matt Lauer, recently revealed as the new owner of the Hunter Valley Station near Wanaka where Oprah Winfrey and Reese Witherspoon were recently filming a new Disney movie. Land access is controversially at the centre of the OIO’s decision to green light this sale, a battle that still rages.
I asked Graeme Todd if New Zealand was doing enough to engage with our new, wealthy neighbours. “In my personal view? No,” he told me. “We can do more.” Todd is even planning to launch a new scheme which he plans to shortly bounce off the local council, aimed at establishing some sort of more direct dialogue with the new, wealthy arrivals.
One example of the ultra high net worth individuals who are recently choosing to put down some roots in Queenstown is one of the heirs to the Multiplex construction empire, Tim Roberts. His family is worth a reported $2 billion and he’s managed to arrive in Queenstown, as well as buy a couple of properties, without any ruffled feathers or media attention, in spite of owning an $85 million Gulfstream G650 jet and living a colourful life in both Perth and Los Angeles. Private jet parking in Queenstown is now officially an issue, with space being booked months in advance.
There’s a sort of Queenstown rule that we give visiting celebrities and newly arrived wealthy residents plenty of space and privacy. It’s a big part of the reason they come here.
But Tim Roberts and other new arrivals would be a natural focus for Graeme Todd’s embryonic bridge building plan.
Chamber of Commerce Chairman Richard Thomas agrees that there is a business opportunity with all of this new money coming into town. “I think we’ll see more of this over time,” says Thomas. He adds that the Chamber is keen to find ways to help diversify the economy away from tourism and “often these wealthy, philanthropic individuals are the catalyst small communities need to do this.”
Mayor Jim Boult likes the idea of more engagement. “There’s been a lot of howling and wailing about overseas buyers,” he says. “However, we don’t see them parading on the social pages of the local newspaper and they stay out of trouble. They are largely invisible.”
Jim Boult acknowledges that the new overseas buyers, as well as wealthy Aucklanders, are pushing up the local housing market beyond the reach of most Kiwis and even some of the people that have lived in Queenstown for decades and are now thinking of leaving town.
But he’s against a Vancouver-style overseas property tax as he says it is discriminatory, even though Vancouver’s tax has successfully cooled their residential property market.
Boult is pushing hard for a visitor tax to ease the pain of Queenstown’s housing and infrastructure crisis, but he does think the town can do more to engage with the new wealthy overseas immigrants and land owners.
We didn’t have time to talk about Australia’s property rules which generally force wealthy overseas buyers to build new houses, not speculate on existing property.
Boult is against an institutional, organised approach to engaging with wealthy overseas buyers saying that “these people are highly individualistic, a personal approach is the only way that’s going to work.”
So the rich escapees from Trump and Brexit can expect Queenstown’s discretion and respect of privacy to continue, but there’ll be a few invitations to low profile business meetings and a few more gentle suggestions along the lines of “What can you do for us?”
Of course there are those who believe our national policy on wealthy immigration and land sale is far too relaxed. Queenstown-based Ralph Hanan, a former World Bank economist whose father was Attorney General and Justice Minister, says the sale of vast tracts of land is damaging our social fabric as well as being risky from an economic standpoint.
He wants to see Queenstown develop its own high value, high tech, high productivity economy rather than “selling the family silver” and seeing areas like Queenstown Hill “hollowed out” by empty mansions. It looks as though Hanan is on a positive collision course with people like Jim Boult and Graeme Todd who believe that the wealthy new arrivals could help realise at least some of the changes that Ralph Hanan is calling for. So far, it looks like the lawyers are winning.
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