New research indicates that foreign ownership of farmland and other rural real estate in New Zealand may be closer to 10%, significantly higher than a recent conflicting estimate of 1.5%.
Whatever the correct number, the end game is likely to be the same: if farmland investment keeps becoming more popular, foreign agricultural investors will become less and less welcome in New Zealand and many other countries.
As more investors begin to invest in agricultural assets for the first time, the issue of foreign ownership will become increasingly divisive among investee countries’ voters. At some point the groundswell of opposition will gather enough momentum to present a political opportunity.
Eventually new investment inflows will become restricted, but the rights of prior investors will be protected: no western economy would risk setting a precedent of confiscation. In all likelihood the new rules would only ever restrict new investment.
Thinking things through to their logical conclusion, in the long-term this could end up being very good news for investors who get in prior to such restrictions being imposed.
