After reviewing a number of sites for the second IKEA store in Israel, it is now official: IKEA Israel owner Matthew Bronfman has won an Israel Land Administration (ILA) tender for a site for the store and accompanying commercial center.
Bronfman will buy a 100-dunam (25-acre) lot in the Soreq triangle area in southern Rishon LeZion. The IKEA store will cover 35,000 sq.m., and a commercial center will be built on the rest of the lot at an estimated investment of $20 million.
IKEA Israel had considered a 100-dunam (25-acre) site in Argaman lot in the Yavne industrial zone, and a lot in the Holon industrial zone. The idea is to exploit the movement of shoppers at IKEA to generate revenue at a complete commercial zone. IKEA Israel will lease properties to various retail businesses for this purpose.
Ganden and , Tiv Taam Hacarmel Holdings Ltd. have built stores near first IKEA store at the Poleg junction in southern Netanya, in order to exploit the shopper traffic generated by IKEA. Bronfman wants to benefit personally from the same traffic at the second store, by being the landowner. He will presumably build a commercial center anchored by Blue Square Israel Ltd. (NYSE: BSI; TASE: BSI), and a branch of Israel Discount Bank (TASE: DSCT), both of which he is a controlling shareholder.
Bronfman plans to open the second IKEA Israel store by the end of 2007, at an investment of $10 million.
Bronfman acquired IKEA Israel last year from Co-Op Blue Square Consumer Cooperative Society (Co-Op) and Albert Gnat at a value of NIS 219 million. IKEA Israel posted a net profit of NIS 35 million on NIS 345 million in sales in 2004. The second store is expected to boost the company’s revenue to NIS 500 million.
Published by Globes [online], Israel business news - www.globes.co.il - on April 26, 2006
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