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A shortage of ultra-luxury homes in New Zealand could limit the country’s ability to attract high-net-worth investors under the updated Active Investor Plus visa programme, according to new analysis from realestate.co.nz.
Changes to the visa rules took effect on March 6, allowing AIP investors who have secured New Zealand residence to purchase residential property valued above $5 million without requiring Overseas Investment Office consent.
While the policy threshold sits at $5 million, realestate.co.nz chief executive Sarah Wood says the strongest demand from offshore buyers is emerging at significantly higher price points.
“The AIP visa programme effectively introduces a positive demand shock into the top end of the market, however the supply has not had time to adjust,” Sarah says.
“There are relatively few homes in New Zealand that meet international ultra-luxury benchmarks, particularly in the $10 million-plus and $20 million-plus segments.”
Data from realestate.co.nz shows more than 36,000 overseas searches for homes priced above $5 million were recorded over the past year.
Of those searches, around 42 per cent targeted properties priced above the minimum $5 million threshold, indicating demand from buyers looking at higher-value homes.
There are currently 616 listings nationwide priced above $5 million, including just 142 homes listed above $10 million.
Demand is particularly strong in lifestyle destinations including Auckland’s waterfront suburbs, Queenstown and Waiheke Island.
Luxury property specialist Sarah Liu of Bayleys Real Estate says some ultra-high-net-worth buyers operate exclusively in the $20 million-plus bracket.
“We have qualified clients who will only consider properties in the $20 million-plus range,” Sarah says.
“If those buyers cannot find homes that meet their expectations, there is a real risk they may choose to invest elsewhere.”
She says many buyers in this segment are seeking architecturally significant homes with privacy, security and premium amenities.
Typical criteria include panoramic water views, waterfront access, extensive garaging and design-led residences that require minimal redevelopment.
Demand is also emerging for large lifestyle estates and waterfront homes in internationally recognised destinations such as Queenstown and Waiheke Island.
The majority of offshore search activity is coming from established wealth markets.
The United States accounts for 19 per cent of international searches for homes priced above $5 million, followed by the United Kingdom at 9 per cent and Canada at 4 per cent.
North Americans currently represent around one in three AIP visa applicants.
Sarah says the ultra-luxury property segment operates more like a capital market than a traditional housing market.
“Even a small increase in demand from qualified international buyers can have an outsized impact when the available supply is limited,” she says.
“With interest in the $5 million-plus segment growing, ensuring New Zealand has a pipeline of premium properties will be important if the country wants to remain competitive in attracting high-net-worth migrants.”
