We often hear the statement that there is no better asset to invest in than gold and real estate. To be honest, that’s true—you can go and check how the real estate prices (and gold) have changed throughout the last few decades. The fact is that even though this sounds like a simple investment plan, the pitfalls are always hidden in the details.
Today, we will discuss one of the most interesting markets in the world when it comes to luxury real estate—New Zealand. Why is it so promising for investors, and what are the key nuances you have to keep in mind when investing here? We will cover the market dynamics, current trends, legal regulations, and everything else you need to know to start investing in New Zealand’s luxury real estate.
Why Invest in Luxury Real Estate in NZ
First of all, let’s deal with the first and the most important question—why New Zealand? Well, let’s start with the tax policies: the current tax fee on luxury property is 15% of the price, which affects only real estate that costs over $2 million. The discussion regarding these tax policies even pointed out that the demand for luxury real estate in NZ is higher than the number of properties on sale—yet real estate agents promised to deal with the issue.
Currently, only around 5% of all real estate in New Zealand costs more than $2 million, which means the other 95% of objects aren’t exempt from the National Foreign Buyer program’s 15% tax.
Thus, there is an ample selection of real estate available. NZ market experts said that most of the buyers of luxury real estate are foreigners, including those coming from China, the US, the United Kingdom, Australia, Canada, other EU countries, and even some Hollywood stars!
What does New Zealand have to offer? First, its climate: NZ is located in the southern part of the Earth and has a maritime climate where there are no significant differences between summer and winter temperatures. For instance, in Auckland, the variation of temperatures is around 9°C between the coldest and the hottest months. This applies to almost all of New Zealand, yet in the southern areas, temperatures are a bit lower and also change slightly during the year.
Second, New Zealand boasts a long coastline of over 15,000 kilometers, which makes it the world’s 9th-longest coastline. In fact, this island country is washed by the water of the Pacific Ocean, so its nature is truly unique and extremely beautiful, with mountains, bays, and forests.
Finally, New Zealand is a highly developed country with great healthcare, infrastructure, culture, and economy, ranking 13th on the Human Development Index—higher than Canada, the United States, and Japan. By nominal GDP per capita, NZ overcomes countries such as France, Italy, Japan, and the EU on average.
The country also invests in modern technologies; for example, over 40% of overall electricity in New Zealand is generated from renewable sources. As a member of the Commonwealth, the country’s official language is English, which makes it even more comfortable for foreigners to adapt.
Current Trends in the NZ Luxury Real Estate Market
Investing in luxury property in New Zealand is a good option. Nevertheless, to make it clearer for you, let’s look at current real estate market prices and dynamics so you can plan your budget efficiently.
Let’s first look at Auckland, the major city on the coasts of both the Tasman Sea and the Pacific Ocean. Prices here are higher than in other cities, but look at what you get—fantastic infrastructure combined with unbelievable ocean views and nature.
For instance, a 340-square-meter luxury house with a personal pool, 895 square meters of land, 5 bedrooms, 4 baths, 2 parking spaces, an individual house design from Young & Richards, oak cabinetry, European porcelain, and other luxury features would cost you around $4,4 million.
Now, let’s think about the return on investment (ROI). The rental price of such property in New Zealand starts at $1,200 to $1,600 per day. With such prices, you could get a 100% ROI in less than 7 years, which is an outstanding offer!
Tips for Choosing New Zealand Luxury Property
There are a few rules you have to follow in order to choose a property in New Zealand for investment:
- Look for properties that are located in popular cities for foreigners, such as Auckland, Golden Bay, and other coastal areas.
- Focus on properties that have at least 4 bedrooms and several bathrooms.
- Look for real estate that has a huge land area.
- Always pay attention to the design and style of the property.
By following these rules, you can increase your chances of making a smart investment in New Zealand’s luxury real estate market. Conducting thorough research and understanding the local market dynamics will also help you find a property that aligns with your investment goals.