Even before the onset of the Covid crisis, New Zealand had a global reputation as a bolthole for billionaires, with the likes of Avatar director James Cameron and tech guru Peter Thiel buying up Kiwi beauty spots.
When the pandemic struck there was a rash of stories about the rich and mega-rich flooding real estate sites looking for luxury Kiwi homes, and just this month the Government announced new measures to attract rich investors.
But surprisingly, the majority of New Zealand's high-end homes are bought by Kiwis. And, despite our enduring fascination with luxury real estate, the top end of the housing market in New Zealand is minuscule.
A OneRoof investigation into the more than 2.2 million residential property exchanges since 2000 found that $10 million-plus sales numbered little more than 100 - 0.004 per cent of the entire market.
And sales in the $5m to $9.99m price bracket numbered just over 1000, or 0.04 per cent of the overall market.
Some of the agents OneRoof spoke to say that the reason for the small number of big sales is that New Zealand just doesn't have the stock in those top price brackets.
Homes that would sell for those prices either don't exist, as in they haven't been built yet, or are owned by people who don't want to sell because they would then have to search high and low to find something similar.
The agents, however, say that if luxury homes were available or were built on spec by developers, they would sell fast because there are plenty of people queuing up to buy them.
This reflects the fact that there are a lot more wealthy Kiwis in the country than there used to be, they say.
A recent New Zealand Herald report backs this up: the number of ultra-rich Kiwis has nearly doubled since 2015, with 390 people now worth $50m or more and that high wealth individuals and associates numbered 12,537 in the 2019 tax year, up from 7009 in the 2013 tax year.
OneRoof data shows the price bands which have seen the biggest increase in sales over the last 20 years are in the $1m-$2m and $2m-$3m price bands, though agents who work in Auckland's exclusive Eastern Bays suburbs say $5m sales for a "standard" home are now common, especially since the sharp spike in prices post-lockdown.
While many of the New Zealanders struggling to get onto the property market may feel faint at the thought of paying $5m, let alone $10m or $20m or more, these prices pale in comparison to the luxury markets in big cities overseas. You could call New Zealand a little on the cheap side.
In the United Kingdom, for example, the richest street is Kensington Palace Gardens, in London, where the average property price is more than $70m.
New Zealand's biggest residential sale, $38.5m for former finance director Mark Hotchin's mansion in Auckland's Ōrākei, is yet to be eclipsed even though that record was set around eight years ago.
Agents say this record is bound to be broken, as there are homes worth the same or more out there but their view is that on the whole, New Zealand simply does not have the pool of palatial homes and apartments that meet the international standards required by the extremely wealthy, who want eight bedrooms, eight bathrooms, eight-car garaging and a spa and helipad.
However, OneRoof's examination of the top 500 residential sales since 2000 shows there is another big difference between New Zealand's prestige market and others around the world. In New Zealand, big sales have a lot to do with land and location and little to do with the quality of the house.
Other findings from OneRoof's investigation include:
- Auckland is New Zealand's prestige capital, accounting for 440 spots on the list; Queenstown claims 28, Christchurch 6 and Wellington 2.
- Auckland's double grammar zone heartland - Remuera - is the suburb with the most big sales (122), followed by waterfront Herne Bay (49) and St Heliers (25).
- Beachfront properties do not dominate the list but are a big driver of sales in suburbs where beachfront is available.
- The median land size of residential properties that have sold for $10m is close to 2500sq m while the median floor area is just under 600sq m.
- New Zealand's apartment market is underdeveloped compared to other global real estate markets, with few apartments able to command $10m-plus.
- No one at the top end of the market is buying for capital growth with very few of the luxury properties on the list seeing big capital growth in the last two cycles.
- New Zealand is unlikely to see a residential sale of $50m-plus any time soon, with less than half a dozen residential properties sporting ratings valuations of more than $30m.
Agents tell OneRoof they have waiting lists of clients with $10m or more to spend on homes in Auckland's top value suburbs of Remuera, Herne Bay, St Heliers and Takapuna. They tend to go door-knocking to find their clients a property but often come away empty-handed as owners don't want to sell.
Nearly all the agents OneRoof spoke to claim that lifting the foreign buyer ban might change things because the more astronomical offers that could be made by overseas buyers might tempt current owners.
On the other hand, some agents say there is a lot more money in Kiwi hands than there used to be and that the problem in Auckland is lack of stock, explaining that there are few landholdings left in Auckland to warrant prices of $50m or more.
"There's a lot of demand for $10m to $20m houses but the stock is limited," says Barfoot & Thompson agent Paul Neshausen, who sells in Auckland's Eastern Bays.
"I sold one in St Heliers in March for just over $12m. I only approached one buyer and they bought it straight away. Quality homes with views and land hardly come up."
Neshausen says people call him regularly saying they have a budget of up to $20m and give him their requirements but owners don't want to sell.
"There's a ton of people with that much money who are New Zealand residents and there is a ton of people who want to move here but there's nothing for them to buy.
"They either end up buying an interim home or they have to buy acreage up north in the Bay of Islands, or Queenstown, but for those city slickers that want that Auckland pad, the pickings are thin.
"The challenge I think for New Zealand homes is they're not up to international standards. I look at a lot of US homes and not only are they quality builds but they're large - seven bedrooms and seven bathrooms, gym, sauna, swimming pool, tennis court, five-car garaging. There's just nothing [like that in New Zealand] so [buyers] end up with an average home, although I say average in inverted commas because we're still talking big money but they're paying for the land, not the house."
Sometimes buyers get rid of the existing house but mostly they spend a lot of money upgrading it to luxury standards. Some individuals acquire several properties to make one super one, such as home-grown billionaire Graeme Hart.
Neshausen says there is a gap in the market for developers to do just that – "buy two or three houses together, bowl them and build a $20m home".
He says, "I think as soon as someone starts doing that, they'll quickly realise there are more buyers than they think."
Neshausen isn't aware of anything in Auckland that could readily break the Hotchin mansion record and says it's challenging to find anything in the $20m-plus range outside of Auckland's blue-chip suburbs.
Neshausen believes if there were no foreign buyer ban, there would be $40m-plus sales. "The Chinese and Americans want to live here and they've got more money," he says.
Ross Hawkins, from Ray White Epsom, agrees.
"I've got overseas buyers who don't have citizenship, in Singapore or Australia, but want to come here with $15m-$20m and buy something," he says.
"Now, it makes total sense to let people that are investing that sort of money in our economy come because we need those funds to get through and out the other side of the pandemic.
"It's just ludicrous we're not taking advantage of that because the people you're talking about know what good value we are."
While the Government hasn't flagged any changes to its 2018 legislation governing property sales to overseas buyers, it announced before the Budget that it is targeting wealthy investors.
Tourism Minister Stuart Nash said new measures would allow more than 200 wealthy international investors to come to New Zealand over the next 12 months.
Hawkins says any suggestion that foreign buyers would shut out locals and first-home buyers is just silly because first-home buyers are never going to buy a $20m house anyway.
"But the seller of that $20m property might buy a piece of development land and deliver 100 affordable houses so it's all good. Money goes around."
He adds: "There's definitely a market for developers to come in and build big luxury homes because not everybody has the time, the knowledge or the ability to do that, but they do want the beautiful home and they're happy to pay for it."
One such spec home in Auckland's Victoria Avenue sold about a year ago for $8.6m to offshore buyers with New Zealand residency. They wanted a special place but did not want to go through the build process, Hawkins says.
Veteran agent David Rainbow, from Bayleys Remuera, says location and land are everything because buyers can always change the house.
"It's the location they will be attracted to first," he says.
"I've just listed one Remuera property which will be marketed quietly at $10m-plus. It's a beautiful character home which has been held in the family for quite a long time, and while there will be people who want to buy that for where it is and what it looks like – most will be after the location."
Everyone's requirements are different, he says. Some want to be near a good school, some near the waterfront, others near a golf course or tennis club.
"One sale I recently did in Judge St in Parnell, the buyer was involved in importing and he was excited to be able to sit and watch the boats coming in with all his stock."
Fellow Bayleys agent Gary Wallace says the luxury market has expanded rapidly in the last decade. About five years ago you could buy a high-end property in Remuera for $8m; now buyers would have to shell out $10m to $20m.
Wallace believes that the intensification of Auckland has made homes on large estates of 2000sqm-plus, such as those still found in Remuera, more valuable than ever because those looking in the top price bracket want privacy.
"They're looking for big tracts of land which can accommodate a very big comfortable home, a tennis court, swimming pool, four-car garaging and space to roam."
He adds: "It's just amazing how strong that end of the market is and if you have the right property there's certainly the money for it.
"I find the people with the most money are so under the radar it's not silly. That's how they prefer to be.
"These days you come across people who have been in a start-up and they've sold their business for $55m or something – the wealth out there is just extraordinary."
Wallace recently heard of one luxury property that the owners were thinking of selling so he approached them to say he had a buyer who was interested but the owners ended up selling the property privately for more than $20m.
One of the reasons these listings are so scarce, he says, is that owners don't want to sell up before they have found something else to buy. He sold a property about three years ago for more than $10m but it then took the sellers two more years of renting before they found something suitable.
Mark Harris, the general manager for New Zealand Sotheby's International Realty, in Queenstown, is not as sure of the impact of the foreign buyer ban, saying a large proportion of high-end buyers are from Australia and, like buyers from Singapore, are exempt from the ban.
"We saw quite a few high-end transactions made by Australians last year even when they couldn't get here," Harris says.
"With the travel bubble, we will certainly see quite a few Australians jump on planes and head in this direction. Brand New Zealand is very strong at the moment."
If people in the US, the UK and Asia were allowed to buy here, big sales would be made, but in terms of total volume of sales they would still be small in comparison to the domestic transactions, Harris says.
To him, properties in the $8m to $10m bracket are the top of the luxury market.
"There's certainly a lot more above $10m in Sydney, Melbourne and New York. We haven't got the same volume as them but we're certainly getting a lot of inquiry in that space. From Aussies, expats and buyers in the US and the UK."
While the inquiry is strong, Harris also points to a scarcity factor.
"You haven't got that many physically on the market. It's a little bit of a horse-and-cart scenario, where they don't inquire because you haven't got it, but if we did, we'd probably sell it."
When the Hotchin record is beaten, and it will be, Harris says, the lucky house will either be in Auckland or the southern lakes, although he points out there is a lot of interest from people looking to move to regional parts of the country, especially oceanside and lakeside.
"We've certainly got buyers capable of that sort of purchasing at the moment."
Harris doesn't rule out a $100m sale, but only if the product is there.
"Our Australian colleagues sold a property in Sydney's Point Piper for A$100m last year, and they sold another for around A$78m. Those sales don't happen every day but for the right sort of property in the right location, yes, I can see that happening in the future here as well."
Harris says if Americans could buy a bolthole here, they would, with Sotheby's getting daily inquiries from people in the US.
"I don't think it's necessarily the bunker mentality but it's about seeing New Zealand as a great place to be in terms of if this thing happens again, which obviously a lot of people think it could do."
Having said that, there are bunkers around Queenstown, he says. "There aren't hundreds of them – that may be a bit of an urban myth – but there's certainly two or three we know of."
The council has also been served with judicial review proceedings.