Ikea says confidence returning in China after $1bn investment

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Ikea said footfall was rising across its shopping centres in China as it unveiled its biggest ever investment in the country.

Ingka Centres, the real estate division of Ikea’s parent company Ingka Group, spent Rmb8bn ($1bn) on Livat Shanghai, a retail and commercial centre that took five years to complete and opened on Thursday.

The launch comes during a difficult period for the world’s second-largest economy, where authorities this week launched a wave of stimulus measures to counteract a property slowdown and broader lack of consumer confidence.  

“For us there is no doubt about the confidence in the China market, and I believe we have the proof points to show that,” said Cindy Andersen, managing director at Ingka Centres, in an interview.

The company said footfall across its 10 China sites was up 33 per cent year on year in the 12 months to the end of August, and up 20 per cent on a like-for-like basis.

“We have [recovered] pre-Covid visitation numbers . . . it creates a lot of confidence,” Andersen said at the launch in Shanghai.

The mixed-use development is at 96 per cent occupancy, the company said, adding that 70 per cent of tenants were local companies and 30 per cent international.

Ikea earlier this month said it planned to invest about $40mn in China in the fiscal year to August 2025, as well as launch hundreds of lower-priced products.

Multinationals in China have largely struggled since the end of the Covid-19 pandemic, with cautious household spending and heightened domestic competition contrasting with earlier decades of runaway growth.

Over the summer, firms such as WPP, AB InBev and Volkswagen warned on conditions in China after a spate of disappointing earnings reports.

China’s three-year real estate slowdown, as well as hitting confidence, has also weighed heavily on construction, though activity has been more resilient in cities such as Beijing and Shanghai.

Ingka Centres also opened a site in Xi’an earlier this year, which it says is the largest wholly foreign-owned commercial project in the province of Shaanxi. The company has not initiated a new project, which typically take years to complete, in China since 2021.

This article has been amended to correct the spelling of Cindy Andersen’s name. We apologise for the error.