KPMG has analysed trends in Foreign Direct Investment (FDI) from 2013 to 2015, based on Overseas Investment Office (OIO) approvals for the past three years. The latest analysis shows that New Zealand’s strongly-growing economy is providing an attractive environment for FDI.
Key findings on the analysis include:
- The United States and Canada were New Zealand’s most significant source of FDI over the last three years, based on gross consideration data provided by the OIO; followed closely by the Australia, China and Singapore.
- Singapore accounted for 20% of FDI in 2015, measured by gross consideration, making Singapore the largest source of FDI in 2015.
- Investment in New Zealand continues to be broad-based across a range of sectors. However, when evaluated on a country-by-country basis, Asian countries have generally had a narrower investment focus on dairy, food and the waste management sectors. By contrast, the traditional investment markets of the United States and Australia have a much broader base of investment, perhaps reflecting the maturity of their economies and their investment networks.
- Over the short run, New Zealand’s FDI statistics are heavily influenced by a few large transactions. The largest 10 transactions over the three year period accounted for 33% of the disclosed total overseas investment. Asia accounted for over half of the largest 10 transactions.
- Dairy, Forestry and Milk Processing are the leading areas for investment in the agri-business sector. We expect that investment in milk processing will be subdued until dairy prices recover. However, this may be offset by speculative buying of farms in the event that forced sales occur in this sector.
- The United States is the largest acquirer of land for the 2013 to 2015 period (40%), followed by China (11%) and Hong Kong (7%). Forestry transactions are the most significant driver behind this statistic.
- Canterbury, Otago and Southland account for 49% of freehold land transactions consented to under the Overseas Investment Act 2005.
Understanding the source and focus of FDI provides insight into how New Zealand connects to the world. This is the third FDI report published by KPMG and in response to market demand we have extended this analysis to include insights into investment by sector and by country.