New Zealand, famed for its outstanding natural beauty, stable politics and diversity of outdoor pursuits, is proving a popular option for Hong Kong property investors. Despite house prices there rising at their slowest pace in 12 months and record-high interest rates, property developers are still seeing plenty of interest from foreign buyers. 'Some of the things that have recently been working against the New Zealand market are the currency and interest rates, which are among the highest in the Asia-Pacific region,' says Darien Bradshaw, regional director, international properties, Colliers International (Hong Kong). 'Having said that, property prices are still low. Our expectation is that we are going to see more investors from Hong Kong investing in New Zealand.' He explains that Hong Kong investors concerned about the New Zealand currency and high interest rates can take advantage of alternative financing options such as taking a mortgage from local banks in Hong Kong dollars. 'What we are generally finding in terms of interest rates is that some of the major banks can finance in Hong Kong dollars anyway. And groups such as ANZ and Westpac also do loans on New Zealand properties.' There are a number of factors that make the New Zealand market especially attractive to Hong Kong buyers, not least of which being the fact that the tax environment is conducive to foreign investment. It is mainly for this reason that despite high interest rates, there has been a steady inward flow of foreign investment in New Zealand properties. As Mr Bradshaw explains: 'There is no stamp or capital gains tax in New Zealand. As a result, acquisition and disposal costs are next to nothing. That has been one of the reasons why countries such as Malaysia [that abolished capital gains tax in April last year] have been capturing more foreign investment. 'It is a very open market for foreign investment and there are absolutely no restrictions on foreign ownership, unlike in Australia. For example, if you buy in Australia you have to buy into the first-hand market. That's not the case in New Zealand.' New Zealand's small population and availability of land are also factors that make the country a popular choice for Hong Kong investors. 'Because of the small population of 3.5million, prices are low. Due to the population density and scarcity of land in Hong Kong, it is not possible for most people there to be able to buy land and build a house on it. In New Zealand you can buy a big piece of land and put a house on it. The ability to do that in Hong Kong is much less due to the cost,' Mr Bradshaw says. Popular properties for investors are master schemes situated close to major cities such as Auckland. 'We are seeing that people are really interested in landed property, people want to buy land and build their house on it,' Mr Bradshaw says. 'The Auckland market has been a little bit subdued recently, but there has been strong capital appreciation there over the past 10 years, so we're mainly seeing investment in master schemes close to, or in, major cities.' Colliers' recently launched Pegasus project offers 98 homesites on land plots ranging from 1,442 square metres to 2,715 square metres, and has proved popular with Hong Kong investors. 'We found that the main interest in the project was in our land plots,' Mr Bradshaw says. 'We had a lot of people buying land plots at around NZ$495,000 [HK$3.09million] to NZ$795,000. The cost probably doubles when you build a house, so at least 50 per cent of the cost goes into the house that is erected on the site.' Queenstown, located on New Zealand's South Island, is surrounded by stunning scenery and there is about NZ$3billion of investment in the district either planned or under way. A new NZ$30million upgrade of Queenstown Airport will allow it to receive international flights, and it is proving extremely popular among foreign investors. Villasqueenstown.com, developer of Commonage Close, an alpine-esque development in Queenstown, says that the city has seen an unprecedented demand for property over the past three years, and that 'unlike other established international resorts where the property market has already reached maturity, Queenstown's growth is based on a relatively low property value level and continues to offer long term investment opportunities'. Mr Bradshaw says: 'We have a project called Jack's Point in Queenstown which we will be launching in the second half of this year. Queenstown is the No1 ski destination in New Zealand and is also considered an all-year-round location as there is everything from excellent mountain biking to trips on jet boats. It is a popular place for Hong Kong investors.' For investors looking to buy into the New Zealand market, Mr Bradshaw has the following advice: 'I would very much stick with developers who have a long track record. So whether you are looking at apartments or masterplan communities, I would stick with groups who have a long track record of success in those areas - that's what I would ensure would be the first thing on the checklist.'