The Active Investor Plus (AI+) scheme was opened in September 2022. What is it delivering?
The policy has come in for criticism for several reasons. One is that it is complex. Another is that it demands that potential applicants must embrace too much risk over too long a timeframe to make it attractive. Its setting of requiring investors to commit NZ$15 million (or a weighed balance of the same) for 4 years compares unfavourably with schemes offered by competitor countries.
As a result, uptake of applications was slow during 2023. Matters have improved slightly as time passes. The following numbers were provided in a recent newsletter from NZ Trade & Enterprise which administers the AI+ programme:
By the end of January 2024 Immigration New Zealand (INZ) had received 44 applications:
- 12 were approved, with a resultant grant of Resident Visas
- 15 were Approved in Principle, which permits applicants to start the investment process which will lead to Resident Visas if they comply with requirements for that process
- 4 were withdrawn
These numbers don’t look very encouraging for the success of AI+. To be fair, though, I remember when the Government opened the previous Investor 1 and 2 categories back in 2009. In the same way, uptake was a trickle at first, but after a few years there were hundreds of applications and approvals a year. It takes time for knowledge about such a scheme to make its way to overseas investors, and in many cases it takes even more time for people to decide to make long-term plans about what to do about their money and their lifestyle.
NZTE goes on to state that there had been NZ$17 million of investment into qualifying assets:
- 48% into direct investments
- 6% into managed funds
- 46% into listed equities.
See our blog for a description of these investment types. In a podcast interview from September 2023 I discuss the AI+ offering in general, and James Turner from our office has written about the meaning of direct investments. The low proportion of investment into managed funds is surprising, because these would normally be seen as safer than direct investment into private companies.
An interesting development emerged recently, whereby the National-led government is seriously considering allowing foreign investors to buy residential-zoned property to build housing. Current settings only allow AI+ applicants to buy shares in a NZ company that is in the business of building or managing residential developments (think apartments or large housing complexes). Other investment-based Residence like the Parent Retirement scheme allow investment into residential developments more directly, but again these must be multi-unit enterprises. What is on the table now could enable a migrant investor to buy even a single property on which they propose to build a new house. The objective is to boost the housing supply which is increasingly overstretched, especially with the massive influx of new migrants in the last year or so.
The new Government wishes to send the message that New Zealand is back open for business, including removing barriers to enterprise and- in this case – investment of overseas money. As time passes this will become an increasingly divisive topic, in that many will not want to see the country sold off to the highest bidder. Watch this space . . .