It
is billed as the ultimate in luxury, complete with a games room,
12-seater cinema and wine cellar. But the NZ$33m mountain lodge
perched on the edge of Lake Wakatipu also boasts a reinforced concrete
and steel structure and can function “off grid” for peace of
mind.
Twin
Peaks View is being marketed to the global super-rich, who have
flocked to New Zealand’s Queenstown in search of spectacular scenery
and a bolthole in
case of global catastrophe. But a pending national law restricting
foreigners from buying homes threatens to halt the region’s luxury
economy boom and stem the influx of overseas billionaires.
“This
law would dry up the secondary housing market,” says Peter Campbell,
founder of Triple Star, the construction company that built Twin Peaks
View.
“This
won’t just affect builders and real estate agents, this will hit the
entire local economy — housekeepers, landscapers, insurance brokers,
car concierge services and boutique wine shops.”
Mr
Campbell says one foreign client, who has invested NZ$60m ($43m) in
the region, has already cancelled a proposed building project because
of the proposed change.
The
bill’s supporters, however, point to an escalating housing crisis in
the Queenstown region, with many families struggling to find homes.
Triple
Star is among dozens of companies and local officials urging the
government of Jacinda Ardern to backtrack and allow rich foreigners to
continue buying luxury housing to support the economy. At
parliamentary hearings this week, critics, including many local
multimillionaires, argued that the proposed law was: “xenophobic”;
would damage New Zealand’s global reputation for openness; and would
not solve the housing problem.
The
Labour-led coalition argues that foreign
buyers are contributing to a housing
crisis in New Zealand, which a recent survey showed has the worst
homelessness problem in the OECD. The issue formed a key plank of
Labour’s platform in September’s election, which focused on tackling
inequality.
The
shortage of affordable housing in New Zealand is mirrored in western
nations — including the UK, Australia and Canada — where low interest
rates have supercharged house prices, making it difficult for people
on low incomes to buy homes. The influx of foreign home buyers has
provoked a public backlash at a time when wages are stagnating and
housing supply remains low.
Few
places on earth highlight the growing divide between the super-rich
and low-income workers better than Queenstown, a picturesque town
surrounded by the Southern Alps. About 32,000 people live in the town
and the surrounding lakes region, which has the highest average house
price in the country at NZ$1.16m, according to the QV House Price
Index.
The
influx of wealthy foreigners, who include technology guru Peter
Thiel, disgraced US news anchor Matt
Lauer and hedge fund pioneer Julian Robertson,
has generated an economic boom for builders, real estate agents and
luxury goods sellers.
Chinese
billionaires are also seeking to get in on the act. Jack Ma, Alibaba’s
founder, has said he wants to buy a house in the country — and that 20
of his colleagues had already retired in the country in their
mid-40s.
Luxury
estates and lakeside homes with spectacular mountain views dot the
Queenstown region, which formed the backdrop of the Lord
of the Rings films. Many mansions boast
“panic rooms” to keep their occupants safe from intruders.
The
number of private jets landing at Queenstown airport has increased 43
per cent over the past five years to 251 last year. If there were more
parking spaces for the flock of Gulfstream, Falcon and Global Express
jets ferrying rich owners into the region, landings would be even
higher.
“We
turned six private jets away last month due to space restrictions,”
says Robin Leach, director of Queenstown corporate jet services. “Our
clients are high net worth individuals from all over the world. Most
of them have property here already or are looking for property.”
But
while Queenstown’s luxury economy is booming, the pressure on local
housing is acute, particularly for young families and young people who
migrate to the region to work in tourism. The community housing
waiting list hit a record 496 in December, a rise of 175 per cent in
three years.
Local
newspapers have reported on the wretched living conditions faced by
service industry workers in substandard rental properties. One modest
Queenstown property, nicknamed the “Castle of Fernhill”, had up to 30
people living in nine bedrooms, according to TV New Zealand.
“It
is not just low-income people facing difficulty,” says Nicky Mason, a
co-ordinator at Happiness House, a community support centre. “We
are seeing more middle-income families struggling to find
accommodation. I would like to see a foreign property ban to provide
some sort of breathing space.”
The
local council opposes the bill, saying it would damage a thriving
luxury home industry, threaten many homeowners with negative equity
and cut off the valuable investments and philanthropic donations made
by overseas buyers.
“Foreign
people with high net worth generally get involved in some sort of
investment activity in the district and are the very first people to
put their hands in their pockets for philanthropic projects,” says Jim
Boult, Queenstown’s mayor. “They are some of our most valued
residents.”
The
council recommends amending the bill to enable foreigners to continue
buying properties above a set price. Overseas buyers could also be
obliged to make a philanthropic contribution, it says.
Michael
Nock, a Hong Kong-based financier who hired a helicopter to find his
own Queenstown bolthole after the global financial crisis, invites
local and international artists to use a studio at his property.
“Wealthy
buyers are positive for the economy,” he says. “I’m not sure the
current thinking to ban foreign buyers is all that sensible. The
Chinese money and US billionaires are buying houses that the average
Kiwis wouldn’t.”