Do you think IKEA affects property prices?

Hey All,
Just interested to get peoples thoughts on whether they believe an IKEA store has any affect on a suburbs property prices?

A number of investors on this forum said they like to invest where the big retailers do and leverage of the huge sums of cash they put into research. When it comes to retail, I do not think there is any bigger than IKEA. I mean they are not like Bunnings after all where you nearly have one in every suburb, in Melbourne for example this is the 3rd store only. One in the East, One central and now one for the West.

Given the amount of customers that flock to these stores, it seems only natural other businesses would be keen to set-up shop nearby and take advantage of the endless stream of money that seems to pour into these stores (doesn't help they design them so you cannot get out!).

Canberra it set to get its first Ikea at the end of this year and Melbourne's West (Camberfield) is on track for a mega concept store early next year.
 
Ikea specifically, no.
However, they do their own research on where they want to put sites. They don't choose at random. You may as well leverage that research.
 
Hi

Hi No from a residential property but maybe from a commercial point of view.

As soon as big companies like Bunnings, masters, JB HI FI or who ever enter a certain location from my experience I have noticed that rents go up and so do prices but only for commercial properties :)
 
I wouldn't say Springvale/Westall has boomed since Ikea moved in. But I do know some savvy investors do look at big companies renting and opening new stores in areas to drive growth. I'm sure I've seen Rixter mention this is part of his DD on an area.
 
Hey All,
Just interested to get peoples thoughts on whether they believe an IKEA store has any affect on a suburbs property prices?

A number of investors on this forum said they like to invest where the big retailers do and leverage of the huge sums of cash they put into research. When it comes to retail, I do not think there is any bigger than IKEA. I mean they are not like Bunnings after all where you nearly have one in every suburb, in Melbourne for example this is the 3rd store only. One in the East, One central and now one for the West.

Given the amount of customers that flock to these stores, it seems only natural other businesses would be keen to set-up shop nearby and take advantage of the endless stream of money that seems to pour into these stores (doesn't help they design them so you cannot get out!).

Canberra it set to get its first Ikea at the end of this year and Melbourne's West (Camberfield) is on track for a mega concept store early next year.

I don't see any benefit in living near an Ikea...heck, I can't see to see any benefit to live near a shopping centre?

If the wife or I was to shop, we would likely drive there, ideally within 15kms to the nearest shopping centre. I never quite understood also living near a freeway, never saw that benefit either.
 
It is not so much about living right near it for convenience, my thinking was more around other factors such as:
* Leveraging their market research. Why have they chosen Campbelfield? There is loads of space in the West so what is appealing about that particular suburb?

* JPCashflow touched on it but what is does for commerical real estate. Naturally other stores want to be around big chains and leverage of their customers. More retail commercial usually makes a place more desirable.

* Suburb Awareness is another thing to consider. I know personally I didn't even know where Springvale was and had no need to go there or mention it. Since Ikea moved in, I have been there a couple of times and are more aware of the suburb and what it is like at a basic level.
 
I never quite understood also living near a freeway, never saw that benefit either.

I live right off the freeway and absolutely love it. I jump on and jump off so easily when driving into the CBD for work. Other people have to spend an extra 10 minutes if not more battling main roads and side streets to get to the freeways. To and From work everyday and that's nearly 2 hours a week.

Do that 5 times a week over many years and you end up spending a heck of a long time extra in your car.
 
I don't see any benefit in living near an Ikea...heck, I can't see to see any benefit to live near a shopping centre?

If the wife or I was to shop, we would likely drive there, ideally within 15kms to the nearest shopping centre. I never quite understood also living near a freeway, never saw that benefit either.

A lot or renters who are students/backpackers don't drive so living a walkable distance to a shopping centre is good. Having said this, a lot of people who can't afford a car will live next to shops.

Living next to a freeway is a bonus for me because if I wanted to go out west or to the city, I just jump on the M5 east and I'm at the destination in a matter of no time. Freeways don't have as much traffic and no red lights so it's like an express route. If I lived a fair distance from the freeway, I have to drive through 15 + sets of red lights before I get to the entry of the freeway. This all eats time, fuel and possible road rage.
 
It is not so much about living right near it for convenience, my thinking was more around other factors such as:
* Leveraging their market research. Why have they chosen Campbelfield? There is loads of space in the West so what is appealing about that particular suburb?

* JPCashflow touched on it but what is does for commerical real estate. Naturally other stores want to be around big chains and leverage of their customers. More retail commercial usually makes a place more desirable.

* Suburb Awareness is another thing to consider. I know personally I didn't even know where Springvale was and had no need to go there or mention it. Since Ikea moved in, I have been there a couple of times and are more aware of the suburb and what it is like at a basic level.

Point 1 is interesting, yeah, I guess you could say they've done their research on growth etc. of a suburb. Good point.
 
Point 1 is interesting, yeah, I guess you could say they've done their research on growth etc. of a suburb. Good point.

Yeah i definitely know a few seasoned investors on this forum leverage heavily from big chains. We are a small group of investors after all, who for most of us do it part-time between our 9-5, all chasing the dream of financial freedom.

The big chains have massive marketing teams dedicated to research, I am sure they do not hang a picture of Melbourne on a board and throw left handed darts to select the next suburb.

I could only imagine the kind of reports that get put together when selecting a suburb but I do not imagine capital growth would be high on the list for consideration.
 
I live right off the freeway and absolutely love it. I jump on and jump off so easily when driving into the CBD for work. Other people have to spend an extra 10 minutes if not more battling main roads and side streets to get to the freeways. To and From work everyday and that's nearly 2 hours a week.

Do that 5 times a week over many years and you end up spending a heck of a long time extra in your car.

We live life once and time is critical. This is why prices close to the CBD rocket up in price. I moved to a 13 min train ride in and right next to the M5 east and ED. I'm saving hrs a week now to do better things like sleep in.

I've heard stories of couples buying a house out west because they want a backyard to run around in but they work in the CBD. A year later, they sell it and move back towards the 10k ring. They spend an extra 1.5 hrs travelling a day out west. That is 30 hrs a month sitting in traffic or the train. Also, they have to wake up extra early; who wants to wake up early?
 
I once heard something about the financial location criteria for Bunnings. It was a long time ago, but had parameters such as minimum population that's growing, covered household income, owner occupier percentages, store exposure, sustainability. They put a lot of effort into their research.

Essentially they're building their stores where they believe there is enough disposable income to buy goods and renovate. They're looking at real estate markets that are growing in value. Their criteria are a bit different from residential investors, but the fundamentals are solid. You'll probably do quite well if you mirror their movements.


It's hard to say about Ikea. I've been there 3 times, each experience left me stressed and wanting to vent my anxiety. I imagine the crime rates in those areas are quite high. ;)
 
I once heard something about the financial location criteria for Bunnings. It was a long time ago, but had parameters such as minimum population that's growing, covered household income, owner occupier percentages, store exposure, sustainability. They put a lot of effort into their research.

Essentially they're building their stores where they believe there is enough disposable income to buy goods and renovate. They're looking at real estate markets that are growing in value. Their criteria are a bit different from residential investors, but the fundamentals are solid. You'll probably do quite well if you mirror their movements.


It's hard to say about Ikea. I've been there 3 times, each experience left me stressed and wanting to vent my anxiety. I imagine the crime rates in those areas are quite high. ;)

Thanks for the great insightful post Peter!
And don't worry about your Ikea experiences, you are definitely not alone. My wife and I are on a 100% strike rate for having a tiff each time we enter the place. You go for a side table and leave with a bed strapped to the car roof and half a kitchen in the boot.
And don't get me started with the knick knacks they leave right near the registers! "Oh look hun, only $2" Pity it equals $200 after she grabs 100 of them.
 
I once heard something about the financial location criteria for Bunnings. It was a long time ago, but had parameters such as minimum population that's growing, covered household income, owner occupier percentages, store exposure, sustainability. They put a lot of effort into their research.

Essentially they're building their stores where they believe there is enough disposable income to buy goods and renovate. They're looking at real estate markets that are growing in value. Their criteria are a bit different from residential investors, but the fundamentals are solid. You'll probably do quite well if you mirror their movements.


It's hard to say about Ikea. I've been there 3 times, each experience left me stressed and wanting to vent my anxiety. I imagine the crime rates in those areas are quite high. ;)

If I recall correctly there are only 2 Ikeas in Melbourne - one in the already expensive at the time of opening Richmond and now in Springvale.

If anything, I think Springvale has improved markedly with the rail being now semi underground, if they manage to upgrade the station and clean up that main road it wouldn't be so bad.
 
The new Ikea is on the Ring road. Where the old Pipeworks Market was. It is easily accessible from many areas.

I don't think they are aiming for the Campbellfield or Broadmeadows population, more those that can get there easily by Freeway or the Ring Road.

It will be their largest store in Australia according to the blurb we got in the local paper.

I have worked out a quick way of getting in and out of Richmond...look online first, get the location of the goods, go through the exit...there is a special lane if you know where you are heading, in, grab a trolley, check the location, grab the items and out!!!!

Chris
 
In retail speak IKEA is so called destination store and it's customer catchment area is really large. They have chosen ring road location only because they found the large enough site that was available with good access to major freeways and customers from western and northern side of Melbourne has relatively easy access to the store. Neighbouring suburb does not matter that much the decision is made based on overall catchment area.

Same principles used to apply for Bunnings, but now they have opened new stores quite close to the existing ones cannibalising their 'old catchment areas' but due to DiY renovation and home decoration boom (thanks for all lifestyle shows) the sales of the existing stores has not suffered.
 
I once heard something about the financial location criteria for Bunnings. It was a long time ago, but had parameters such as minimum population that's growing, covered household income, owner occupier percentages, store exposure, sustainability. They put a lot of effort into their research.

Essentially they're building their stores where they believe there is enough disposable income to buy goods and renovate. They're looking at real estate markets that are growing in value. Their criteria are a bit different from residential investors, but the fundamentals are solid. You'll probably do quite well if you mirror their movements.

I know it's only anecdotal but there's a brand new Bunnings in Forbes NSW (real close to Parkes) and it's beeeauutiful. I've only been out this way for a few years but the first thing I noticed when I moved here is how many unrenovated properties there are. Now we can all make our houses nice.
I'm sure they go for unrenovated areas where the household income is increasing from very low to not so low to not too bad now, as mentioned above.
As for IKEA - my impression is that they plant themselves in areas where there are young people renting and buying and where there's easy access and in an area that is/was slightly industrial so they can use up lots of space. They want to be as close to as many young people suburbs as possible but the site itself may be a way off gentrification.
As already said, there are less IKEAs so more important to get as much access from as many different routes as possible.
But Bunnings = impending gentrification, yes. :) imo
There are also certain govt programs and courses run at TAFE that I look out for i.e. a lower socio-economic region but lots of young 'uns.
 
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