MUMBAI: Swedish furniture giant IKEA is on the verge of signing a mega deal for its first store in Mumbai in what property experts describe as the “largest foreign direct investment (FDI) in retail real estate by a retailer in India”.
TOI has learnt that Ikea is expected to ink a Rs 1,000 crore-plus agreement with Mumbai-based builder Vikas Oberoi to set up a 3.5 lakh-square-foot store in Borivali (East). When contacted, an IKEA India spokesperson said, “The Swedish home furnishings company has expressed interest in buying the first land parcel in Mumbai. As of now, we are awaiting approvals from relevant authorities before the final sign off and will comment once the process is complete.” Market sources said Oberoi will build the ground-plus-two storey store for IKEA.
Negotiations between the two parties have been going on since last year, and sources said the transaction is likely to be sewed up soon. “Ikea has been very keen to enter Mumbai,” said sources.
The new store will be built on part of the 25-acre property, which Oberoi Realty bought from Tata Steel at an e-auction two years ago. The developer paid Rs 1,155 crore for the plot located at the junction of Western Express Highway and Dattapada Road in Borivli (East). The entire plot has a development potential of over 50 lakh sq ft built-up area.
It is learnt that Oberoi plans to attach a 5.5 lakh sq ft mall next to the new Ikea store. The Ikea group owns 313 stores in 38 countries.
Just last month, the Swedish furniture retailing giant purchased the lease rights of a 26-acre plot on the outskirts of Mumbai from Tata Group company Rallis for around Rs 214 crore, as TOI had reported on March 30.
The site is at the MIDC Industrial Estate at Turbhe on Thane-Belapur road in Navi Mumbai, which may house a back-end unit for IKEA, known for its huge warehouse-like stores.
Ikea was among the first to move into India after the country allowed 100% foreign direct investments in single brand retailing. It has announced plans to invest Rs 10,500 crore to open 25 stores in one of the world’s fastest growing regions.
The IKEA spokesperson said the company is also looking for land sites in the prioritized states of Delhi & NCR, Maharashtra, Karnataka and Telengana as part of the first phase of retail expansion in India. “It is a priority to find the right store locations at the right price, with metro connection and easy access to public transport. In July 2015, we purchased our first site in India in Hi Tec City in Hyderabad and will open the first Indian store in Hyderabad by autumn 2017. The goal is to open 25 stores in India by 2025,” said the company official.
Early this week, TOI had reported about the largest retail space transaction in a high street–the Spanish clothing and accessories retailer, Zara, took on lease 50,000 sq ft carpet in the heritage Ismail building in the Hutatma area in south Mumbai. Zara will pay Rs 2.5 crore a month as lease rental to the building’s owner, Supariwala Exports.