Government officials initially questioned if US billionaire Julian Robertson would follow through on plans to build a $30 million lodge on Waiheke Island. David Williams reports.

In March, the Overseas Investment Office wrote to advise it would recommend ministers reject an application from US billionaire Julian Robertson to buy land on Waiheke Island.

Robertson, who Forbes magazine estimates is worth $6.5 billion, wanted to buy 34 hectares of coastal land at Kauaroa Bay, Waiheke Island and build a $30 million luxury lodge on it, for up to 40 guests.

But Government officials weren’t swayed by the fact that he was paying $18.9 million for the land and had a proven track record of developing world-class lodges in Northland, Hawke’s Bay and Queenstown, including top golf courses at Kauri Cliffs (played earlier this year by former US President Barack Obama) and Cape Kidnappers.

An OIO solicitor, whose name is redacted, wrote to Robertson’s lawyer, Jeff Morrison, to say the office’s initial view was the application be declined. Because Robertson’s company Waiaua Bay Farm, hadn’t lodged a resource consent, engaged experts, or even talked to Auckland Council about its plans, the investment was at a “conceptual stage”, the letter said.

The unknown OIO lawyer referred to Finance Minister Grant Robertson’s letter of November last year, which directed the office to be sure investments in rural land were “genuinely substantial and identifiable”.

“We consider that the applicant has provided insufficient evidence to satisfy us that the lodge is likely [the writer’s emphasis] to proceed. Therefore we do not consider that the economic benefits claimed as sufficiently committed to for us to consider them likely to occur as a result of the proposed investment.”

“Your initial view would simply not stand scrutiny in a court of law or any other sensible decision-making forum.” – Jeff Morrison

Morrison’s reply, written on March 26, shows his exasperation at over-zealous officials questioning the motives of one of New Zealand’s richest part-time residents. To dismiss the potential economic benefits of a proposed new tourism venture as not being likely because consent hadn’t been granted was, he wrote, “both surprising and illogical”.

“We would note that no rational investor – whether local or international – would contemplate seeking a resource consent of the type needed … before they have certainty as to whether or not they own the land in question.”

As to the benefits not being “substantial and identifiable”, Morrison wrote: “Your initial view would simply not stand scrutiny in a court of law or any other sensible decision-making forum.”

The OIO’s interpretation of the minister’s letter was “somewhat literal”, he said. The minister’s intent was to protect New Zealand land that is, or has clear potential to be, farm land. Morrison also questioned what expert evidence the OIO relied on to belittle the likely benefits from a significant tourism asset, to question Robertson’s commitment to the tourism industry, and put aside an offer of ecological restoration for the Waiheke property.

(The one issue over which Morrison acquiesced was providing public access. As a result of the OIO letter, Robertson’s advisers met with the Walking Access Commission and agreed access along a marine and coastal area to a lookout point and pier.)

The OIO did eventually change its tune, recommending, in June, that Ministers Eugenie Sage and David Clark grant consent, which they did. Asked by Newsroom for an update on Robertson’s lodge plans, Morrison says he’s not able to provide any further information.

‘Strong business incentive’ for lodge

The exchange of letters between the OIO and Morrison were released to Newsroom under the Official Information Act, part of a package of documents that reveal further details of Robertson’s plans and the Waiheke property itself.

The application says there’s a “strong business incentive” to build an ultra-luxury lodge on Waiheke, close to New Zealand’s biggest airport. “Currently most visitors arrive in Auckland but then fly directly on to the lodges without staying in Auckland or the surrounding area. By establishing a lodge on Waiheke, the applicant will provide an opportunity for its guests to have a short transfer from the airport to their first destination on their itinerary, in order to rest and start to explore after their long flight.”

Over the last five years, 80 percent of guests to Robertson’s lodges have been international visitors. Almost half of the total guests are from North America. Generally, they stay 12 to 18 nights in New Zealand, at multiple lodges, paying between $1000 and $3000 a night.

Assuming it gets consent, the Waiheke lodge will take about two years to build, and require between 32 and 40 full-time-equivalent staff. The lodge’s restaurant will be open to the public.

(If it doesn’t get consent, Robertson will consider selling.)

Local spinoffs

Waiheke already has five high-end accommodation providers, with capacity for up to 54 guests. Adding another lodge, the application argues, will have spinoffs for the local economy, such as tour operators, restaurants, and food and beverage providers. The restaurant will serve Robertson’s Dry River wine, of course.

The OIO conditions state consent must be lodged by the end of next year and obtained two years later. The lodge must be open by the end of 2026.

(Some local opposition is anticipated. The application says Waiheke has a “vocal and active environmental activist community who rigorously assess and often actively oppose new developments”.)

The 34ha coastal property bought by Robertson is in the island’s south-west. Pocked with stands of pohutakawa and kanuka trees, with a freshwater wetland at its heart, it’s just 100 metres from the Whakanewha Regional Park. The existing Kauaroa Bay homestead, built in 1896, has five bedrooms, a swimming pool and tennis court. It faces Rangitoto Island. The homestead will form part of the luxury lodge. There’s an existing helipad.

Behind the homestead are the graves of European settlers John and Lucy Watson. The graves will be maintained.

Environmental push

A managed ecological programme is planned for the property, including ongoing predator control. Robertson – whose other lodges have sprouted environmental programmes, including kiwi breeding at Cape Kidnappers – also wants to financially support volunteer group Predator Free Waiheke 2025.

The Waiheke property’s seller was dairy farmer-turned property developer Christopher Reeve, worth $75 million according to NBR’s Rich List. Reeve planned to plough the profits into Caldera Health Ltd, which is developing a non-invasive test for prostate cancer. Since January, Reeve’s holding in the company has increased from 24.8 percent to 28.6 percent.

Property prices on Waiheke are rocketing. Last November, Auckland Council said valuations on residential properties on the island leaped an average of 64 percent since 2014, with the average property worth $1.16 million.

But there are concerns about a tidal wave of tourists that, some say, are damaging the very features of the island that make it a tourist destination.

New Zealand’s premium travel market, meanwhile, has been booming. In May last year, Tourism NZ said spending in luxury lodges was up 19 percent in the previous 12 months.

David Williams is Newsroom's environment editor, South Island correspondent and investigative writer.

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