The latest in the saga of retail giants turning house developer is that Inter IKEA has bought a 13 acre site on Sugar House Lane, in what will become the site of the London Olympics — right next to the Olympic Stadium to be precise — to build a mixed use development of retail and office space and 1500 residential housing units. Contentious as they may be; new players are entering the housing market, is it good or bad news?
News of the IKEA plan follows the recent approval of a Tesco housing scheme in Bromley-by-Bow, consisting of 450 residential units, a primary school, shops and a hotel, which is Tesco’s fifth development after those in Dartford, Kent, Streatham and Woolwich.
The Tesco story went national for obvious reasons, while IKEA’s previous developments were completed with much less fuss. Yes, that’s right; this isn’t IKEA’s first foray into property development in the UK. The company has built a development of prefabricated houses in Gateshead, which, despite all the jokes about flat-packed housing are fully occupied, and “honestly modern” according to the Telegraph. The firm had a proposal to build a 19 story apartment block across from Hillingdon station refused.
The system used to build the Gateshead houses was called BokLok, similar to the kit-houses being made and sold by UK firms.
Plans have not been released for the Sugar House Lane development, all we have is statements from Inter IKEA saying that they won’t look like the BokLok housing, and a statement from Peter Andrews, the chief executive of the London Thames Gateway Development Corporation (LTGDC). Andrews said that he expects the units to display “the ethics of IKEA”.
“From what I’ve seen, they’re going to be different to the high-rise-dominated plans that were up before,” he said.
Andrews also said that he fully expects the development to become “a Covent Garden in the East End”. A retail, housing and leisure hub abutting the Olympic Park, this IKEA village will be one of the things making the new East End a place in which people will be proud to live, as well as a tourist destination to die for.
The question of whether this is good or bad depends on your viewpoint. From the viewpoint of outward facing business in the east end this is a good thing, because UK developers and investors are often prejudicial to the industrial east end, whereas those from outside are coming in with an open mind. Inter IKEA are currently joined by Australian developers Westfield and Lend Lease.
From a first-time buyer’s perspective this could also be good, because it is expected the 35% of the 1500 units will be affordable housing, and affordable by IKEA’s standards may be more affordable than that of Barratts.
For the residential property industry, agents, surveyors, architects, and for the wider economy, companies with substantial capital entering the market can only be perceived as a good thing.
On the whole though, time will reveal whether retail big-shots have a place in the creation of residential housing in the UK or not. One thing is certain; most developers care about the bottom line more than whether housing is affordable to core society, and it is unlikely that Tesco, IKEA, Inter IKEA or any big retail chain will have different priorities.