New Zealand’s investor immigration policy is not for the faint hearted!2 Apr 2024

Over the years New Zealand has had a wide range of immigration policies to attract migrant investors. Some were successful, and some not, with policies often to the forefront of political leanings as to whether such migrants should be enabled to “buy” their New Zealand residence.

The previous investor policy ran successfully for over a decade before closing in July 2022. During this time, it attracted over $12 billion of investment into New Zealand. Investors had the option of investing $10 million for 3 years, or $3 million for 4 years. There were incentives for investors who invested in active investments (eg; the $3 million could be reduced to $2.5 million) but generally most investments were made, understandably, in lower risk managed funds and bonds.

The previous Labour Government introduced the current Active Investor Plus (AIP) policy in September 2022 saying - “we want to encourage active investment into New Zealand, which generates more high-skilled jobs and economic growth compared to passive investment”.

It is fair to say the AIP is a highly complex policy. Applicants must nominally invest $15 million but the actual investment amount is determined by the weightings given to the different acceptable investment options. For example, investment in Direct Investments has a 3 x weighting, meaning only $5 million investment is required, while an investment in Managed Funds has a 2 x weighting. Investment in NZ listed shares is still available but has a 1 x weighting and a maximum investment of $7.5 million. The full investment amount must be transferred within the first six months of approval, and the amount to be invested in acceptable investments must attain 50% within 18 months, and 100% within 36 months with the full investment term being 48 months from the date of the initial investment. Pending full investment, the residual funds are held in Holding Investments such as bank deposits and Government Bonds. There is an English language requirement, and the applicant must spend a minimum of 117 days in New Zealand during the 4 year investment term.

Acceptable Direct Investments and Managed Funds are determined solely by New Zealand Trade and Enterprise who assess and approve applications from providers based on particular “benefit” criteria. However, NZTE does not undertake due diligence on these investments meaning there is significant onus, and risk, on individual investors to undertake their own research. Acceptable investment options have been limited to date, but investment managers are now developing more bespoke products that better align with both the policy, and investor risk appetite.

To date 47 AIP applications have been made although 5 were subsequently withdrawn. Of the remaining 42 applications, 19 have been successful, and 12 have been approved but have yet to complete their initial investment – while 11 remain under process. The main source countries are USA and Hong Kong, followed by Germany, UK and China, and around half of the investment made has been into Direct Investments.

New policies always take time to become understood, and to gain traction in the market, but it is apparent, given the success of the previous investor policy, that the AIP is facing headwinds and some changes to simplify the policy settings, and provide more mainstream investment options (eg: infrastructure bonds?) are needed.

With the Australian Investor Programme (BIIP) effectively closed, New Zealand is well positioned to benefit from migrant investors looking to relocate down-under. The Active Investor Plus is our only investor visa option currently and requires significant professional guidance to navigate its complexity – it is definitely not for the faint hearted!

Link: First Published in the Waikato Business News, April 2024 Edition, Page 4