Laurent Lore
Business & Investor Edition
May 2022
https://files.constantcontact.com/a72d4ad8001/fa7dfc4f-4dc9-4e93-8904-d1fd35190591.png
Greetings!
New Zealand is opening for business once again. From 2 May, people from "visa waiver" countries can visit without having to apply for a visa before arrival, like they used to before COVID hit. In October, the border is expected to reopen completely so that we will return to something like the "normal" that existed before March 2020.

Having said this, anyone planning to travel into NZ still needs to do COVID-19 pre-departure testing and meet vaccination standards. With new variants of the virus swirling around, it is likely that these will remain in place for some time to come. And don't assume that the settings will remain static. If planning to travel, check again before you start packing.

Simon Laurent
Principal
Investor Applications and Processing Times
A look at the published timeframes for Investor Visa applications is sobering reading. It is claimed that it can take 4 years to get a decision. This may get somewhat shorter for the Investor 1 (NZ$10 million) category; but even for the very high-net-worth individuals whom we have assisted recently, it has taken in the vicinity of 12 months to achieve an outcome.

Back in October 2020, after the pandemic was in full swing, I wrote about how the Business Migration Team (BMT) at Immigration New Zealand was poorly resourced to handle the hundreds of applications already on hand.

Right now there is some hope for optimism. First of all, the volume of new applications has been reducing in the last few months. New Zealand's "closed door" approach to entry from offshore may have gone on too long. While competitor countries such as Australia have already returned to business as usual, our efforts to slow the spread of COVID-19 by keeping the borders shut has had significant negative effects on the economy, including the labour supply. People who want to migrate are simply looking elsewhere.

Secondly, the INZ stats show a dramatic upswing in decisions being made on Investor cases since the New Year, approaching levels not seen since 2017. While no comms have been forthcoming about this, we must conclude that more staff have been reassigned to BMT to get through the backlog. If this continues, INZ might get the caseload under control toward the end of the year.

Now might be a good time to consider applying. It can sometimes take a few months to get everything together for a Residence application of this type. It is also possible that, as the year progresses, the Government's Migrant Attraction bureau will be going out to market once again, putting NZ once more at front of mind. If there is still a pent-up demand out there - and it is likely that there is - then application numbers could swell during 2022 and delays could build up once again.
Market Conditions
There is a lot of specialist commentary out there about the NZ economy. We do not purport to give expert advice on market conditions. In brief, a few key observations come to mind:

  • As with much of the world, NZ is facing an inflation blow-out of the order of 6.9% in the year to March 2022;
  • In response, the Reserve Bank has been ratcheting the Official Cash Rate (OCR) upward in the last few months. It has gone from 0.25 in October 2021 to its current level of 1.5% on 13 April 2022, a mere 6 months later;
  • Trading banks have responded with hikes in their lending rates. The flip-side of this is that investment rates will keep going up for some time as well, so that returns on deposits and fixed-interest portions of managed funds will become more attractive;
  • The increased cost of borrowing is aimed at dampening a housing market that was getting out of control. This seems to be having some effect, as increases in house prices have slowed, and even retreated in some areas. Still, housing in NZ is expensive relative to income - we rank sixth least affordable country to buy in, according to a recent report;
  • Business confidence has been net negative for the last couple of years, and took a further tumble early in 2022. However, there was something of an uptick in the last couple of months, perhaps aided by a sense that NZ is going back to a new kind of normal;
  • Unemployment is at a record low of 3.2%, a figure not seen for 15 years. This is creating a drag upon business activity because employers cannot fill staff shortages. The ability to bring in overseas workers is still very limited, which at other times would have plugged the gap. This does nothing to alleviate pessimism in the market about the economic outlook.