Changes in NZ Forest Ownership Based on Overseas Investment Office Data

1st May 2024

In the period January 2019 to April 2024, the New Zealand Overseas Investment Office (OIO) approved 228 sales of either forests or farmland bought with the purpose of converting to forestry. During this time only nine applications were rejected with seven of these occurring in 2023. In total, these sales equal an area of 259 000 hectares.

On average the annual sales area has been ~50 000 ha per year from 2019 to 2023. In total, there have been 47 different overseas entities purchasing forest or farmland for forestry conversion since 2019. The average sale size over the database period is ~1 200 ha, while the median is substantially lower at ~500 ha. On average the largest sale has covered ~35% of the annual total sales area, however in 2019, 2023 and YTD 2024 the largest sale represented closer to ~50% of the total sales.

The following chart shows the approved sales area by year with the largest area sold in 2019, the same year which saw one of the largest recent forest asset sales. A jump in “Farmland to Forestry” conversion sales is observed in 2022 coinciding with the introduction of average accounting (offering a more generous accumulation of “safe” carbon units), and a jump in the value of NZUs.

Since 2022, there has been a notable drop in conversions driven by changes to conversion rules, carbon price softening, P89 land price increases (now capturing the value of the conversion), and uncertainty in the future of forestry and the ETS.

Source: OIO, Margules Groome

As recently reported in multiple news outlets[1], IKEA (Ingka Investments) has substantially increased its footprint in New Zealand over the last couple of years. Since it entered the markets in 2021 it has bought a total land area of 24 400 ha. At its current purchasing rate, IKEA will soon be one of the 20 largest forest owners in New Zealand. However, they are not the only international company investing heavily into New Zealand plantation forestry. In addition to IKEA, four other new entrants rank in the top 10 most land purchases in New Zealand. The total purchased area for these new entrants ranges from 8 000 ha to 16 000 ha. An interesting trend that Margules Groome has observed is that all of these companies are either fully or mostly owned by European investors.

For further information and analysis on OIO or any forest sales transaction data, please contact Margules Groome.

[1] Stuff NZ, 31 January 2024, “How Ikea is taking over New Zealand’s forests and farms”;
Wood Central, 2 February 2024, “On Brink of Opening First Store, IKEA Piles into NZ Forest Assets”