Ikea flags western expansion with Perth site buy

Ikea has bought the property at 6 Sunray Drive, Innaloo,which houses its Perth big-box outlet

Swedish furniture giant Ikea has snapped up the real estate on which its only Perth showroom sits and flagged it is keen to ­expand in major capitals despite cost hurdles.

The company, which has 10 centres in Australia, is strengthening its network to drive growth among both on-premises shoppers and online buyers, who may pick up at its famed blue box stores.

Ikea Australia & New Zealand expansion manager Fabian Winterbine said that when the company was in a position to own its assets, it bought them, which had driven the $163m purchase from property group GDI.

Ikea has 10 big box stores across Perth, Adelaide, Melbourne, Sydney, Brisbane and Canberra, and now owns them all, giving it one of the most valuable retail property holdings in the country.

“We’re always looking at some opportunities for expansion,” Mr Winterbine said, noting that online shopping was also a focus across Australia. “We’re really looking at ramping up our services to make that easier and more affordable,” he said. The company has three smaller outlets, alongside its 10 “big boxes” to expand its reach.

In Perth, it may also look to the southern suburbs now it has locked in a northern suburbs location by buying the Innaloo site where it has long been a tenant. But it remains tough to make new locations stack up.

“I think it’s become more difficult over time … certainly for the types of properties we’re looking at,” Mr Winterbine said. “We want to be close to where people live and where they work and socialise.”

He said the cost of construction had gone up and it had become more difficult over time to find large sites and build stores.

The Perth property was in Ikea’s sights for years and the chain made an unsuccessful ­attempt to buy it in 2017 for $132m. The plans were thwarted when it was instead bought by property group GDI for $143.5m.

Ikea has now tied up a deal to buy the centre in Sunray Drive at Innaloo from a fund managed by GDI for $163.75m. This will make it the owner of the buildings for its Perth store, including four smaller assets leased to other tenants.

Ikea Australia chief executive Mirja Viinanen said the success of the Perth market for the chain had enabled it to invest with confidence and optimism for further growth and development. “Ownership opens the door to making new improvements to our home, finding efficiencies within our physical space and ­installing infrastructure to support our omni-channel growth and bold sustainability goals,” she said.

Ikea is planning upgrades including installing rooftop solar PV panels, EV chargers on site for delivery vehicles, and shifting to heating and cooling powered by renewable energy.

The Perth outlet had the highest sales growth of any Ikea store in Australia in the last year – and it reaped the full benefit of this surge.

Perth businessman Alan Tribe in 2017 sold his private company Cebas, which held the franchise for Swedish furniture retailer in Adelaide and Perth, to parent company Ikea.

Ikea was already franchisee for Queensland, NSW, ACT, Victoria and Tasmania, and merged all Ikea operations in Australia under a single ­ownership.