A sister firm of IKEA is the latest global player to bet big on growth in India after buying a land parcel near Delhi for development into a mall anchored by the big-box retailer.
Ingka Centres, which develops shopping complexes centred on the Swedish furniture giant, announced last Friday that it had purchased a plot spanning 47,833 square metres (514,870 square feet) in the city of Noida, with plans to invest a total of INR 5,500 crore ($759 million) in the project.
The news of the new “Meeting Place” or shopping centre anchored by an IKEA store globally, comes after the flat-pack furniture phenomenon opened its first Indian retail outlet in Hyderabad in 2018. Ikea opened its second India store in Mumbai late last year.
“India is an exciting and dynamic market, and today’s acquisition is a key milestone in our strategic vision to transform the business in response to the changing retail environment,” said Ingka Centres managing director Cindy Andersen. “Millions of people live within easy reach of Noida and we want to build emotional connections with them, by bringing as much value as we possibly can to their lives and communities.
Meeting Community Needs
Ingka Centres describes the Meeting Place concept as different from the typical mall, providing a sustainable mixed-use destination that is always IKEA-anchored and designed around the needs of local communities.
And while Ingka is withholding detailed plans for the Noida project until a future date, the company has 45 malls in operation throughout Europe and Asia, including three in China. Ingka developed and opened IKEA-anchored retail malls in Beijing and Wuxi in 2014 and in Wuhan in 2015, all under the LIVAT branding. Three more projects in Xi’an, Changsha and Shanghai are under development.
The $1.2 billion LIVAT Shanghai, which broke ground in late 2018, is Ingka’s single biggest investment globally. When completed in 2022, the entire mixed-use development promises 430,000 square metres of floor space and enough offices to house 3,000 of the Swedish group’s staff.
In addition to IKEA, LIVAT Shanghai will provide shop space for more than 300 domestic and international fashion brands, as well as food and beverage outlets accompanied by cultural and entertainment options, according to the company statement.
Tenants at the existing LIVAT malls in China include mainland electronics retailer Suning and familiar foreign names like Zara, Forever 21 and Watsons.
Global investment heavyweights have increasingly turned to India in recent months in search of juicy yields from commercial real estate.
A case in point was when regulators last December gave the all-clear for US equity major Blackstone Group to buy a large portfolio of commercial and retail properties from Bengaluru-based real estate player Prestige Estates.
Valued at $1.5 billion, the real estate acquisition was one of the country’s biggest ever, giving the Manhattan-based fund manager possession of 2 million square metres of assets, including nine retail malls.
Real Capital Analytics reported this month that India enjoyed Asia Pacific’s highest growth in commercial transaction volume in the fourth quarter of 2020, delivering a 352 percent year-on-year spike to $4.3 billion.
In all, India saw a record level of commercial property investment in 2020 at $6.2 billion, which was up 46 percent over the preceding 12 months.