A renowned Hawke’s Bay sheep, beef, and deer station that sustained significant damage during Cyclone Gabrielle will be added to IKEA’s fast-expanding NZ forest empire. It is the latest acquisition by Ingka Investments, IKEA’s sister company, snapping up the site for $13,025,000.
IKEA is targeting NZ forests for investment, with the world’s largest furniture retailer buying out the country’s forests and farmland, with Cyclone Gabrielle providing an opportunity for IKEA to get into the market.
As reported by RNZ, Hawke’s Bay Federated Farmers president Jim Galloway said the cyclone has forced some farmers to make tough decisions.
“Some farms that were badly damaged were sold into forestry. It’s not that surprising, given the level of damage. The cost, effort, and energy to make these repairs is massive, so some farmers—especially those who are later in their farming careers—might consider this as an option.”
Already, IKEA and Ingka Investments have secured more than 21,000 hectares of commercial forestry and agricultural lands thanks to NZ’s controversial special forestry test—a process introduced in 2018 to streamline foreign investment in forestry.
In recent years, foreign interest in NZ forests “has blown all other asset classes off the map”, according to Beef and Lamb’s Chief Insight Officer, Julian Ashby, who said the (since removed) farm-to-forestry conversion provisions have driven a surge in foreign investment into commercial forestry.
As reported by the NZ Herald, data from the Overseas Investment Office shows Ingka Investments has been given approval for 25 sales in New Zealand covering 23,495 hectares, with one application (the sheep, beef and dear station) now approved.
When contacted about Ingka’s interest in buying up NZ agricultural and forestry, an IKEA spokesperson confirmed that the retailer was “considering different opportunities, including forestry investments into the country. “We are committed to being in Aotearoa, New Zealand, for many years and are taking a long-term approach to our planning.
“Our goal is to protect and support forest resources for generations to come; we want to create long-term employment opportunities, support local biodiversity through the protected parts of our forests, and help to sequester GHGs [greenhouse gases] through the growth of our trees and the soil of the protected parts of our forests.”
Wood Central understands that IKEA has a small management team based in Tauranga that oversees all Ingka Investments properties, where it works with Forest 360, Logic Forest Solutions, IFS Growth, and Southern Forests.
“Our general approach is to invest in areas of resilience and sustainability that offer returns.”
Globally, Ingka Investments, IKEA’s largest owner-operator, holds a diverse portfolio, including stakes in a truck-sharing business, a logistics coordination firm, and various plastics recycling businesses.
In the past, it has secured more than 40,000 hectares of forests across Romania and the Baltics — after the company was accused of “brutal” logging practices in Russia and cutting “old forests that have high conservation value,” according to the Wall Street Journal.
IKEA, for what it’s worth, is the world’s third-largest timber consumer by volume. In 2019, it procured more than 21 million cubic metres of timber for furniture products.
In January, Wood Central reported that work on IKEA’s new Auckland store—the first in New Zealand—is running to schedule and slated for an opening in mid-to-late 2025.
The building design meets Australian (rather than NZ) Standards and has successfully achieved a 5-Star Green Star rating for design. Once constructed, it should meet the eco requirements for NZ’s “Best Practice.”
“We’re six to seven months from groundbreaking, so we’re pleased about progress with the new store,” Mr Winterbine said in an interview with the NZ Herald.
IKEA’s push into the New Zealand market comes as the furniture giant pivots from Europe and instead focuses on the North American, Asian and Oceanic markets.