Oamaru - known for its limestone architecture, coastal beauty and Steampunk museum.

Overseas property buyers are becoming a frequent sight in Oamaru, a once sleepy town on the South Island's east coast.

Alan McLay, a former mayor and an agent with Ray White, said the town's property market had sprung to life and house prices were now 15 to 20 per cent above rateable value.

"The last six months have been really quite spectacular. It's like the word got out [that] Oamaru is the place to be: historic precinct, views, cheap residential."

JOHN HAWKINS/FAIRFAX NZ Oamaru real estate agent Alan McLay (right), seen here with friends in 2009, says there are opportunities in his town and foreign buyers are recognising that.

As well as domestic buyers, McLay had dealt with enquiries from Australia, the US and France - and "quite a bit of Chinese". Some were based in New Zealand, others were not.

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Oamaru was also a surprise entry on Chinese property website Juwai's list of the 10 most viewed locations in New Zealand.

Auckland, Queenstown, Christchurch attracted the most hits, followed by Oamaru and Wellington. Kerikeri, Taupo, and Clyde also made the list.

GARY KIRCHER The sweeping view from the site of the old Oamaru Hospital, being redeveloped by its Auckland owners.

The small town's allure may well be its Victorian charms but in recent years, Oamaru's local economy has made big strides. A major irrigation project has helped, and young people have started moving back.

Some investors had been very impressed with the returns from small-town commercial property, McLay said.

"A lot of these overseas buyers aren't filthy rich, they're just moderately rich so still looking for an affordable bargain and for some of them, it's possibly a means to an end coming to live in New Zealand as well."

One long-term investor in Oamaru is the Goodland Group, a New Zealand company set up 20 years ago by a Malaysian migrant.

The company owns the old Oamaru hospital high on the hill, and has turned the old maternity hospital into tourist accommodation.

There are more plans for accommodation, a subdivision and ultimately apartments on the site.

Hari de Alwis​, the company's project manager, said Goodland had always seen Oamaru as having strong tourist and other potential.

"It's a scenic spot," he said.

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