High energy costs in New Zealand have emerged as a notable concern among offshore investors, according to the latest findings from Simpson Grierson’s Expanding Horizons M&A 2026 survey. The annual survey, which polls large investors from Asia-Pacific, North America, and Europe who have engaged in at least one investment in New Zealand over the past five years, highlights energy prices as a growing barrier to investment.

The survey found that 30% of respondents from these regions consider New Zealand’s elevated energy costs a major or moderate obstacle when evaluating investment opportunities. Over the year to March 2026, local electricity prices rose by 12.5%, making energy the largest contributor to inflation for three consecutive quarters, data from Stats NZ indicates. Furthermore, in the June quarter, prices for petrol and diesel surged by 27.5% and 47.7% respectively, influenced by geopolitical tensions arising from the conflict in Iran, pushing headline inflation to 4.1%.

While respondents remained anonymous, a venture capital firm based in the United States noted that rising energy costs directly impact valuation assumptions and earnings projections, emphasizing the need for assurance that businesses can sustain profit margins amid higher operating expenses. Simon Vannini, a partner at Simpson Grierson, described energy prices as one of the most significant operational risks for New Zealand companies. He added that investors are scrutinizing how management teams mitigate energy price volatility and ensure stable supply.

Beyond energy concerns, the survey revealed a broader decline in New Zealand’s appeal to foreign investors compared to the previous year. In 2025, 49% of participants anticipated completing a deal within 12 months—the highest rate since the survey’s inception in 2019. This year, that figure dropped to 40%, partially attributed to increased global caution linked to the Iran war.

Despite these challenges, some positive indicators remain. Partner Anastasiya Gamble underscored that while global volatility is prompting investors to prioritize markets closer to home, New Zealand continues to be regarded as an attractive destination for foreign capital. It maintains a leading position in the Asia-Pacific region for ease of doing business and the quality of investment opportunities. Additionally, 51% of those surveyed reported that global uncertainty has increased their intention to invest in New Zealand.

Corporate governance emerged as the top attraction for 46% of respondents, with strong institutional ratings for New Zealand’s Inland Revenue service, which received high marks from 64% of investors. Other favorable elements included the country’s approach to profit and dividend repatriation and the relative simplicity of its tax compliance. This marks a shift from 2025 when investors valued modest company valuations more highly, suggesting a greater current focus on operational reliability over speculative growth.

Investors also responded positively to regulatory reforms aimed at facilitating inbound capital. These include eased overseas investment restrictions, an updated Active Investor Plus visa, favorable tax settings for infrastructure projects, resource management reforms, and the lifting of a ban on oil and gas exploration.

Nevertheless, the prospect of a general election has introduced some uncertainty. A significant proportion of investors—60% from North America, 56% from Europe, and 30% from Asia-Pacific—indicated that the upcoming election is influencing their investment decisions due to potential policy reversals. Gamble noted that elections typically prompt a temporary pause in investor activity, as market participants seek greater predictability. However, she added that most international investors take a longer-term view extending beyond election cycles, typically over three to five years.