IKEA Cyprus to open in September
Source: Financial Mirror
The budget furniture store IKEA will open its first outlet in Cyprus on September 5 within the busiest commercial square mile on the outskirts of Nicosia, where other store openings are expected the same month in what is probably going to be the biggest shopping mall on the island.
Vassilis Fourlis, president of the operator of the furniture franchise that already has two IKEA stores in Greece, will be in Cyprus for the inauguration of the 22,000 sq.m. store strategically located within the ‘Mall of Cyprus’ at the Shacolas Emporium Park that will include retail stores, clothing shops and food outlets.
Fourlis will also be here next week for a media event and to introduce the IKEA catalogue that will be distributed in the wider market.
Although IKEA products can no longer be placed in the ‘low cost’ category, they are known for their functionality, simple designs and affordable prices.
The Fourlis group officially announced in October 2005 that it was to build the first IKEA store in Cyprus, through its House Market subsidiary. It was initially expected to commence operations by June this year, but has been recruiting local staff for training since last year.
Fourlis’ flagship store with a floor space of 20,000 sq.m. opened in Thessaloniki, followed by a second 25,000 sq.m. IKEA store near Athens airport last year. A second Athens outlet is expected to open in September and the Group also plans to open a new IKEA outlet in Bulgaria in 2008.
The cost of establishing the Cyprus and Athens stores is estimated at EUR 40 mln, while the annual turnover of House Market following the full operation of all three stores is expected to top EUR 300 mln.
IKEA Cyprus is expected to generate annual sales of EUR 40-50 mln, Vassilis Fourlis told Reuters in an interview last October 2006, while the sale of a 20% stake in Kotsovolos to Dixons Group is estimated at contribute EUR 32 mln to Fourlis Group earnings.
The IKEA opening is regarded as a welcome move in Cyprus, after the IKEA-owned Habitat franchise in Nicosia closed unceremoniously last December due to troubles at the Greek franchise operations.
At the time of closure a Habitat statement read: “It is with deepest regret that we confirm Habitat’s franchise partner Franco Import has come into financial difficulties leading to the closure of four stores – three in Athens and one in Cyprus – on December 11. This situation has been triggered by an external supplier to Franco Import, not by Habitat.”
The statement went on to say that Franco Import and Habitat UK Limited have been partners for almost ten years and that the company was, “saddened that Franco is facing challenging circumstances.”
Though the companies are owned by the same conglomerate, the opening of two IKEA superstores in Athens and Thessaloniki is said to have hit Habitat hard in Greece, with an Athenian newspaper reporting that it was only a matter of time before Habitat got into trouble.
Habitat is owned by the Ikano Group and operates as an independent commercial legal entity from the IKEA Group.
The Habitat store in Nicosia reopened its doors to the public briefly in March in an attempt to get rid of its outstanding stock and satisfy previous orders.
The store has since been taken over by the TAG Designer clothing company that already operates a store on Zena Gunther road.
Nick Says … Great news all
round for property investors in Cyprus!. First of all, the fact that
IKEA are responding to a demand for inexpensive furniture in Cyprus
means that they believe it is worth investing in the island. IKEA only
build stores where their market research has indicated that there is
going to be sustainable demand. This is another indicator of the
health of the Cypriot economy.
Secondly, as a seasoned U.K.
investor, I find that IKEA furniture works extremely well for my rental
properties as it is of excellent design quality, and is durable and
practical as well as being extremely affordable. I am really pleased
that I can now access IKEA’s products for my Cypriot property when it
completes next year. Traditionally, furniture in Cyprus has been more
expensive than in the U.K., so the introduction of IKEA will make the
market more competitive and provide affordable furnishing solutions to
both investors and people furnishing a holiday/retirement home.
investment in Cyprus is therefore positive for investors from both
angles and I look forward to trudging the aisles there in search of a
Bjorken shelf or two!
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