Works for the new IKEA store, due to open in 2025, are under way. Video / Carson Bluck
Global retailer Ikea has today announced it plans to spend $407 million in New Zealand, an amount a retail expert called “unprecedented” for a shopping business arriving here.
Mirja Viinanen, Ikea Australia and New Zealand chief executive and chief sustainability officer, issued a statementtoday in which that amount was declared, which consultant Chris Wilkinson - managing director of First Retail Group - said was the highest he knew of for one retailer.
How much Ikea was spending here had previously been suppressed in the retailer’s application to the Overseas Investment Office (OIO) back in 2022. “Cost of commencing business - withheld,” that decision on April 14, 2022 said.
But today, Viinanen’s statement said: “Ikea has today released that it will be investing a projected $407 million to establish and commence business in New Zealand. The projected $407m is made up of the cost of the physical Ikea store land acquisition, site development, construction and fit-out.
“The figure includes the cost of creating the digital capabilities required to offer a seamless online shopping experience to New Zealanders. Also included are costs to set up a local supply chain with customs, freight, transport and warehousing,” the business said.
Mirja Viinanen of Ikea announced construction of the new store at Sylvia Park.
An application by American-headquartered Costco Wholesale declared the cost of its establishment in this country was more than $100m, when it bought land from New Zealand Retail Property Group and developed a new store at Westgate, Auckland.
Costco Wholesale also needed OIO consent because it plans to establish a business in this country in which the expenditure involved exceeded $100m - the land purchase and the development of the giant new store with its fuel station, food court, pharmacy and hearing aid sales centre.
Ikea said its $407m included the cost of recruiting staff.
Last week, Ikea said it had begun to look for the first local hires here: a people and culture manager.
Around 400 jobs are expected to be created by Ikea’s arrival, the business said.
Ikea Sylvia Park market manager Johanna Cederlöf this month showed off a new flatpack box, displayed to show the retailer is hiring. Photo / Ikea
Viinanen said: “Entering a new market is a significant undertaking. Our investment is a key part of our desire to enter the market in the best way possible and establish our omnichannel retail business in New Zealand for the long term.”
Wilkinson said of the $407m figure: “This is unprecedented and shows how serious they are about this market. This is significant and indicates the long-term commitment to New Zealand. Auckland is really their beachhead into the wider market in this country. We know they’re constantly increasing their land holdings in the South Island in their forestry and as a business, they are really big offshore investors.”
Steel framework for walls is now up at the Ikea site in Mt Wellington, Auckland. Photo / Jason Dorday
The site at Sylvia Park would be the flagship because of its location in the centre of so many consumers, he said.
Information from KPMG published in December showed the top 10 deals approved by Toitū Te Whenua Land Information New Zealand from January to August 2023.
The highest amount was $2.5 billion for the “enterprise value” of NZX-listed Vector Group’s sale of half of its smart meter management business to the state government-owned Queensland Investment Corporation.
Ikea’s Viinanen said today the first shipment of the retailer’s products here would arrive next May, ready for the store’s opening later in 2025.
The business had also leased a 20,000sq m warehouse from Auckland Airport at The Landing Business Park, Māngere, she said. That lease had started last August. The site was being transformed into a purpose-built warehouse, fitted out with technology enabling logistics excellence, vital for store and online shopping, she said.
The chain’s first store is a 34,000sq m building on a 3.24ha site, bought from Kiwi Property for $41.4m.
In March, the Heraldreported how steel framing was up for the exterior and interior walls.
The site at 10 Clemow Dr is across the railway line from the mall and near the new Resido apartments, opening next month. Ikea’s framework is now visible, with the first two of three levels up.
Viinanen said today that concrete floor slabs would be poured at the new store soon.
Ikea is due to open later next year, she said.
Anne Gibson has been the Herald’s property editor for 24 years, has won many awards, written books and covered property extensively here and overseas.
