On 9 February 2025, the New Zealand Government announced changes to our Active Investor Plus category (AI+) that clearly signal to the international investment market that we are open for business.
Two new classes have been created under the existing AI+ – summarised in the table at the base of this article. We believe the new policy settings will create significant investment interest and a dramatic – and much needed – increase in the receipt of foreign direct investment as a result.
We are looking forward to taking these refinements to market and competing internationally again for investors looking for an alternative country option – starting with the US in March. We’ll be competing in an international environment where the push factors outside New Zealand have never been better to attract interest and investments here in return for a resident visa, so that bodes well for the potential success of these new settings.
If we are smart as a country, we will capture that investment interest.
With this, both the public and private sectors who engage with those investors will extract greater diversified investment in New Zealand on a far greater scale than is currently being achieved. Subsequently, this will deliver the wider economic benefits the policy is designed to create.
Changes fix a number of flaws
In the lead up to drafting this article, we looked back at our article released when the Active Investor Plus Category (AI+) was introduced in July 2022. The article was entitled, “High Stakes Poker”.
The move into the AI+ settings in 2022 was risky. It was well meaning and looked to direct offshore investment into investment assets and classes that the prior government believed were highly beneficial to New Zealand.
It’s hard to argue against that intention because the focus was on extracting maximum benefit to New Zealanders under these settings.
However, the policy design was ultimately flawed due to a lack of sufficient due diligence. Put simply, the prior government broke a fundamental rule of business when they adjusted the settings – they failed to engage with and understand their customers when forming a new product.
Why call it high stakes poker?
Investment visas like this are products created by the public sector that the private sector take to the international market to “sell,” in a competitive market that is full of other countries’ products designed at attracting the same customers.
In 2022, we used the poker analogy for the “hand” the private sector had been dealt to play with. As we suspected at the time, it turned out that our cards were not as good as others around the international table.
The relatively low number of applicants to date under the AI+ is evidence of that: the pool of international investors looking for these types of investment-based visas has not shrunk, but New Zealand’s market share has, dramatically.
The core assumption that applied, was that investors would be driven to make more meaningful and riskier investments in New Zealand if the visa settings mandated them to do that. This belief/assumption was unfortunately misguided.
A sophisticated investor will never be drawn into an investment they are not comfortable with, even if it comes with a nice visa on the side.
Over the past two years we have seen a significant number of potential investors “put off” the possibility of the investor visa proposition in New Zealand due to the unattractiveness of these riskier investment products at such an early stage in their New Zealand journey.
Current settings discourage investors
In our opinion, having managed a significant number of AI+ applications over the past two years, for the most part the type of investors that have made applications under the AI+ are the type of investors that would have gravitated towards those asset classes anyway, without being mandated to do so.
However, the existing settings discourage investors that are not willing to take on significant investment risk when they barely know the country. This is where the loss materialised. It can simply be categorised as an opportunity loss.
By failing to have an easier step into the investment market in New Zealand, we lost an opportunity to engage with those investors over a longer period, to eventually secure investment diversification into the types of products the policy was aimed at, and greater long-term economic return with their growing familiarity and comfort with the country.
Why we welcome the changes to AI+
We welcome the changes announced yesterday by the Prime Minister. It is a sophisticated refinement that retains the positive elements of the prior AI+ model (while also removing some of the unnecessary complexity).
Importantly, the new settings address most of the inherent flaws in the policy that have led to its failure to generate the scale of investment into New Zealand that the economy clearly needs.
Please refer to the table below for the main eligibility highlights for both the Growth and Balanced products, while here are our high-level views on these two options:
Growth Category – our take
- Current AI+, but version 2.0.
- Simplified and aimed at delivering the same type of outcomes under the existing AI+, but sensibly refined to create added benefit to those who chose to engage in direct and managed fund investments by a significantly reduced investment timeframe and lower physical presence requirement as a reward (and incentive) for doing so.
- If investors are going to be active in these investment classes that create the highest benefit to New Zealand, they will spend the time they need onshore to be actively engaged for that purpose.
- In any case, the investment term of those investors will far exceed the mandated minimum period of three years due to the nature of the investments being made.
These settings create a significant incentive for such investors to engage in the Growth Category instead of the Balanced Category. Basically, countering any unintended cannibalism of these types of investors by virtue of the wider Balanced settings (if cheque size is not a problem).
Balanced Category – our take
- Re-sets what has been missing.
- An opportunity for investors to step carefully into the New Zealand investment economy and, with that, set a balanced investment approach based on their personal appetite for investment risk.
- The expanded investment timeframe of five years and the physical presence required of 105 days over that five-year term is reasonable, it sets a platform to allow New Zealand to engage with those investors over a long timeframe to retain that investment and diversify it over a long period of time.
- We will secure investors that we have not been capturing under the current settings. With this, we will secure an opportunity to leverage that interest to the benefit of New Zealand with a longer-term investment timeframe in mind, as some investment returns simply take longer to materialise than others.
The point here – New Zealand will only secure an investment return from those who choose to invest in the first place. This category allows New Zealand to simply invest in these people –who are not engaging under the current settings – for the receipt of a greater long-term return for that investment.
Naïve to think “passive” investments are a mistake
Some have argued that a return to “passive” types of investments would be a mistake. We believe it is naïve to suggest that. Many who suggest this have a vested interest outside this class of investment and/or do not understand what a “passive” platform creates.
In our experience of operating around the various investment-based products for over 25 years, the receipt of an investment of any type simply creates an opportunity for New Zealand. It is what New Zealand does once they are invested/engaged that ultimately pays larger dividends.
Some of our most engaged and significant scale investors under the prior Investor 1 Category started with a simple mixed bond/equity portfolio to commence their engagement.
From that platform, they introduced significant capital and diversified their investments over time into some significant direct investments (including establishing new VC funds) that have produced huge value to the New Zealand start-up sector.
Had some of those investors not been afforded the opportunity to easily step into the New Zealand investment sector and commence engagement, that result would not have materialised; it would have materialised in another country.
The point here, is that with a greater level of investment and commitment (in any form), the end results will net out far greater than the current settings have been able to achieve. This is due to the increased number of applicants committing to a New Zealand investment-based visa (i.e. greater levels of investment mean all assets classes net out positive over time – as compared to a narrow/restricted policy setting that has a limited number of investors participating).
Main eligibility highlights for Growth and Balanced products
| Policy Variables | Growth Category | Balanced Category |
|---|---|---|
| Minimum Investment | NZD 5 million | NZD 10 million |
| Investment Timeframe | Investment retention for a minimum of three years | Investment retention for a minimum of five years |
| Standard Physical Presence Conditions | Main applicant must spend a minimum of 21 days in New Zealand over the three-year investment term | Main applicant must spend a minimum of 105 days* in New Zealand over the five-year investment term |
| Acceptable Investments | - NZTE-approved Direct Investments - NZTE-approved Managed Funds | - NZTE-approved Direct Investments - NZTE-approved Managed Funds - NZ Listed Equities - Philanthropy - New residential, commercial and industrial property developments - NZ Bonds (Government, local government and corporate) |
| *Physical Presence Reduction Option | Not applicable | As a result of investing funds over the minimum amount of NZD 10 million, and those extra funds are placed/committed into NZTE- Approved Direct and/or Managed Fund investments, the standard physical presence requirement of 105 days over the five-year investment term can be reduced as follows: - NZD 1 million – 14-day physical presence reduction (NZD 11 million = 91 days onshore) - NZD 2 million – 28-day physical presence reduction (NZD 12 million = 77 days onshore) - NZD 3+ million – 42-day physical presence reduction (NZD 13+ million = 63 days onshore) |
| Transfer and Investment Timeframe | Fully invested/committed within six months of approval in principle (extendable for a further period of six months) | Fully invested/committed within six months of approval in principle (extendable for a further period of six months) |
| Age | No limitation | No limitation |
| English Language Ability | Not required | Not required |
Our Immigration Law experts have extensive experience in this area, so please reach out to us today for tailored advice. If you’d like to sign up for regular updates – including updates about our international roadshows – please go to this page and select Immigration – Business and Investment.
