A customer leaves an IKEA store on June 26, 2014 in Emeryville, California. The Sweden-headquartered company, founded in 1943, is one of the world's largest retailers in furniture, household goods and textiles. (AFP photo)

MUMBAI: Swedish furniture retailing giant Ikea is buying the lease rights of a 26acre plot on the outskirts of Mumbai from Tata Group company Rallis for about Rs 214 crore. It could be the venue for the label's first outlet in western India.

The transaction, subject to regulatory approvals, fuels the world's largest furniture maker's growth plans in Asia's third largest economy. The site at the MIDC ndustrial Estate at Turbhe on Thane-Belapur road in Navi Mumbai could also house a back-end unit for Ikea, which is known for its huge warehouse-like stores.

The company, among the first to move into India after the country allowed 100% foreign direct investments in single brand retailing, intends to invest Rs 10,500 crore to open 25 stores in one of the world's fastest growing regions. Last year, the chain had bought a 13-acre plot in Hyderabad for its maiden outlet in the country. The store, spread across 4 lakh square feet, will open its doors next year.

The per square-metre rate at which Ikea signed the deal at the MIDC area is lower than the going market rate, a person from the real estate industry said. At Rs 214 crore, the rate works out to be Rs 20,400 per square metre as against the current rate of Rs 25,000-Rs 30,000 per square metre in the same area, said Manohar Shroff, a developer and real estate expert in Navi Mumbai.

Ikea, known for massive stores selling flatpack furniture and accessories, is scouting for more sites in different parts of the country as it intends to have its label dot Delhi-NCR and Bengaluru, among other locations. Its outlets will showcase an array of products from its global portfolio as well as have goods tailored to local taste.

Even as Ikea charts out the strategy to have a physical presence in terms of stores in India, the Swedish giant also plans to double the value of goods sourced from the country by the end of this decade.

At present it sources textiles, mattresses, furniture and carpets, etc worth about $370 million annually from the country.

