Swedish furniture retailer IKEA plans to invest about 2 billion euros more in new and existing Mega shopping malls in Russia by 2020, it said on September 18, reaffirming long-term expansion plans for the country despite an economic downturn. The head of IKEA Shopping Centres Armin Michaely, presenting the company's long-term strategy to tenants, said the next mall - IKEA's 15th in Russia - would open in Mitishchi, just outside Moscow, in 2018.
"This is a big investment for us," Michaely said. "We will spend around 260 million euros just on the shopping centre" plus investment in traffic infrastructure.
Out of 2 billion euros ($2.6 billion) earmarked for investment in Russia, 40 percent would go to existing stores and 60 percent to opening new stores, he said. The company is looking to open in smaller cities with populations of between 500,000 and 1 million people, he added.
Michaely said the investment plans would be pushed through despite an economic downturn aggravated by western sanctions.
"There is a bit of a slowdown but we still believe in Russia and that (the economy) will get back to a healthy course. This is why we are committing such a big investment," he told reporters.
In the 2014 financial year, the company's tenants in Russia turned over more than 6 billion euros. The company plans to refurbish five Mega malls and also expand three of the five by 2018.
"All tenants who are in Russia are very positive to go with us for extension and confirming they want to expand. But at the moment it's a bit difficult to get new brands to Russia because of the (economic and geopolitical) situation we face," Michaely said.
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