Global economic headwinds hit New Zealand’s long-term investment attractiveness

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Offshore investors are focused on short-term opportunities as global economic uncertainty weighs on long-term investing sentiment.

In its fifth mergers and acquisitions (M&A) report surveying overseas investors’ attitudes to New Zealand, law firm Simpson Grierson said offshore appetites for investing in the country appeared to be mixed this year.

Of the 90 international investors surveyed, fewer than half (44 percent) were planning to invest in New Zealand within the next 12 months.

There was a 51 percent increase from 2022 in the number interested in short-term investments.

“I think people are on the lookout for opportunities as valuations decline, people are looking for bolt-on investments for existing investment platforms,” Simpson Grierson corporate partner James Hawes said.

It came as the global economy faced an uncertain period with high interest rates and inflation pressure.

“What we’re seeing less of is people taking a long-term view that New Zealand is a place they want to invest over the next two to three years, so appetite for brand new greenfield investments is probably down, but adding to existing businesses is very much on the agenda.”

The report found only 29 percent were considering investments in the medium- to long-term, compared to 54 percent last year.

It also found 14 percent would not consider New Zealand as an investment destination, up from 0 percent last year.

But Hawes said New Zealand remained an attractive place for investors.

“Our survey results showed people were still very bullish in terms of New Zealand as a location. It came out on top as the country most easy to do business in the Asia-Pacific region.”

The survey showed the election was also a factor for a sizeable minority, with 31 percent saying a change of government would increase their intention to invest in the country.

“Even though the survey shows a drop in positive sentiment, we don’t think the elections and potential change in government will have any tangible impact on investment here,” Hawes said. “Looking ahead, we have cause for cautious optimism despite the headwinds.”