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Swedish Modern Comes To Town
When IKEA announced a new housing project near London's Olympic Village, the jokes about flat-pack, do-it-yourself housing were fast and furious. Now that more of the facts about the Strand East development have emerged, it is clear that the utilitarian and accessible Scandinavian spirit of the home furnishing giant will permeate the project's functional, affordable housing.
Link to article: "The new project is only the first step of Ikea's journey into urbanism. Inter Ikea's LandProp division has acquired a second parcel north of London and has initiated talks for a $1.45 billion project in Birmingham twice the size of the one in London; it has reportedly shopped for sites in Hamburg, Germany, too. LandProp also intends to build a hundred budget hotels across Europe and is considering a push into student housing, all covered by the stores' bottomless cash flow. "Once we decide to do something, we go like a tank," said LandProp's chief, Harald Muller, at Strand East's unveiling in 2011. (Citing overwhelming media interest, LandProp refused repeated requests for an interview.)
But why is Ikea charging into Europe's sluggish real estate markets when its flat-pack furniture is still flying off the warehouse shelves? Sales keep climbing (up 7% each of the past two years) and it has plans to open hundreds of stores (and nearly double sales) by the end of the decade, expanding in China and planting the Swedish flag in India. Strand East and any sequels are sideshows by comparison.
In fact, these urban experiments may mostly be a legacy-building exercise by Ikea's controversial founder, Ingvar Kamprad. Now 86, Kamprad has spent decades building an increasingly labyrinthine series of tax shelters to ensure family control after his death, transforming Ikea into a vast conglomerate comprising wind farms, office parks, and even a line of electronics.
A typical maneuver last year involved Interogo, a Liechtenstein-based foundation Kamprad established in 1989 to act as a holding company for Inter Ikea (itself a holding company), both for tax reasons and to guarantee control of the Ikea brand. Inter Ikea quietly disclosed in its 2011 annual report (the first in its history) that Interogo had sold Inter Ikea the chain's own intellectual property assets (most notably the trademark for the Ikea brand) for $11 billion, all in the name of transparency (previously Ikea had to pay Interogo a licensing fee). Building your own neighborhood as a place to park your cash is easy compared to those machinations."
Note: Hunter Communications handles marketing at Burbank Town Center, home to IKEA Burbank.