Need A Home To Go With That Sofa

Like many young couples, artist Nina Leth Jensen, 32, and her husband, Jakob, 33, a manager with the Copenhagen metro, feared they would never be able to afford their own home. With a four-year-old child and another on the way, the family was desperate to move to a bigger space but found themselves priced out of the market.

Then in June, 2004, Nina spotted an ad for BoKlok (Swedish for "smart living"), a line of affordable prefab homes marketed by Ikea. "I told my husband, 'this is the house for us,"' says Nina. "We already had a lot of Ikea furniture, so why not have a total Ikea home?"

Today, the Jensens live in a BoKlok development in Hillerod, Denmark, just outside of Copenhagen. For $45,000, some 25% less than comparable homes in the area, the family got an airy 800-square-foot, three-bedroom apartment with an open-plan living area, small garden, and garage. Ikea also threw in $500 in gift certificates and the free services of an Ikea designer.

Aimed largely at first-time buyers, BoKlok is proving a big hit, with more than 2,500 units sold in Sweden, Finland, Norway, and Denmark since the program was launched in 1997. In a new development outside Oslo, the 60 homes sold out in 45 minutes. Next up: Southampton, England, where the first BoKloks will go on sale in January. BoKlok, a stand-alone company that is jointly controlled by Ikea and Swedish developer Skanska, also is eyeing France, Poland, the Netherlands, and the U.S. "There is a global need for affordable housing," says BoKlok managing director Anders Larsson. "We want to fill that gap."

To come up with the right price tag, Ikea enlisted well-known Swedish economist Pia Nilsson. In-store customer surveys then revealed what the market wanted: a safe, low-rise apartment in a small-scale development with outside space, open-plan living, and lots of light.

A BoKlok development consists of several timber-framed buildings, each containing five to six apartments. Putting the units together is a snap. Most of the work takes place on the factory floor. The assembly line starts with carpenters, who erect the walls and windows. Then a fully equipped Ikea kitchen and bathroom are added. Floors, shelving units, and electrical wiring are installed before painters add the final touches. The modular units are then delivered to the construction site on 18-wheel trucks. A crane drops them in place, and builders complete the last fittings, a process that typically takes just one day.

CEO Anders Dahlvig acknowledges BoKlok "generates a lot of buzz for the brand," but adds, "we are not a house builder ourselves, so we have to be cautious." Yet with more and more people clamoring for the total Ikea lifestyle, Ikea may have to change its tune.

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE