London's newest development: The rise of the Ikea city

The furniture store has opened the first part of its huge east London mini-city. But don't expect too many Billy bookcases

Can you see the lights?" asks Giorgio Bellanca, pointing with a flourish towards a concave wooden tower which crowns London's newest square. "They look fantastic at night." Bellanca is maitre d' at Dane's Yard Kitchen, a high-ceilinged kitchen with al fresco tables looking out over the Three Mills Wall River. The retro reflection of the Aubrey Moore Point high-rise shimmers on the surface of the water. "I think our building is in harmony with the outdoor space," reckons Tony Austin, the restaurant's manager.

The development, which opened last month, might be called Dane's Yard – but it's the Swedes who hold sway. This is just the first piece of an ambitious wider plan by Ikea to develop a whole new district. If it's successful we could see Ikea cities everywhere: Der Spiegel reports that the company is already looking for similar sites in Hamburg.

The furniture retailer's InterIkea parent company used its property offshoot LandProp to gobble up 26 acres in Stratford for £25 million. The Ikea city, planned by Anglo-German practice Arc-ML, will be grandly titled Strand East and boast 480,000 square feet of office space, yoga studios, a creche, a Marriott hotel and shops. There won't be an Ikea store, though that new tower looks like it was bought from one: it's nailed together from planks of pine.

Whether the 1,200 homes being built here will come with Lack tables, Billy CD racks, and a cupboard full of lingonberry jam is a moot point. I can't resist asking Tony Austin whether he'll be dishing up meatballs. "Did you want them on the menu?" he deadpans.

The Dane's Yard name comes from Dane & Co, who manufactured inks here – a charming mosaic of a Great Dane looks out on the square. An advert for the firm from the 1950s proudly boasts they were once the "sole British makers" of Day-Glo fluorescent paints. The spaghetti tangle of canals and backstreets which make up the sprawling Ikea city site are deserted – the factories and distilleries have shut. The eerie feel is apt: Danny Boyle shot 28 Days Later at 3 Mills Studios, at the far end of the area. Boyle returned to direct the Olympic opening ceremony just across the misleadingly named Stratford High Street – actually a grisly stretch of the A11 which cats would be well-advised to avoid. One scrappy yard here holds another Olympic secret: Camp Cleanevent is still festooned with the cabins that housed 1,200 cleaners during the games.

Ikea has come to dominate the way people furnish their homes, offering a near-perfect balance of style and cheapness. We love its bargain furniture, but do we want it building our cities? "The aim of Strand East is to work in close dialogue with city authorities to transform a near-derelict industrial site into a sustainable waterside neighbourhood," says LandProp's Andrew Cobden.

"Interior design is private. Urban design has a public component," muses Joop De Boer, who blogs for architecture site Popupcity.net. "It doesn't seem good to me that a single company's concept makes up the look and feel of a whole neighbourhood. I like a city with visible expressions of different styles."

This isn't the first time Ikea has built homes in Britain. The company erected 36 BoKlok houses in North Felling, Tyneside. Gateshead Council helpfully informs prospective buyers that they're pronounced "Boo Clook". The Swedes also tried to build flats on top of a new shop in west London in 2005, but an unimpressed Hillingdon Council threw out the plans.

Ikea boasts of its environmental credentials, and Strand East promises to use "responsibly sourced materials". But critics counter that Ikea doesn't always deliver. Dr Alexander Markovsky, a forestry ecologist in Russia, tells me he is "concerned about the activities of Swedwood, a 100 per cent-owned branch of Ikea, which operates in Karelia". Markovsky runs a charity called SPOK which aims to protect the environment of Karelia, the Russian region which abuts Finland. He scolds Ikea for logging in areas which contain ancient trees of high conservation value.

Ikea isn't the only corporation dipping its toes into the pool of town planning. "In the last 10 years the private sector has assumed more control of public places. This trend is led by governments keen to save money," states Anna Minton, author of Ground Control: Fear And Happiness In The 21st-Century City. "The key point here is whether Strand East will be controlled by Ikea's LandProp, or whether it will be a democratic, inclusive part of the city. If it turns out like the Canary Wharf estate – policed by private security – that vision is disturbing."

Cobden promises Strand East will offer "high-quality public and private amenity spaces".

Supermarkets lead the way in "mixed use" development – ostensibly to get new stores built. Just across the River Lea from Strand East, Tesco is trying to build its own town at Bow. But, in 2010, the Commission For The Built Environment chided Tesco's original Bow plans, saying: "The site layout is incoherent and piecemeal."

The sheds and flats supermarkets trot out are where design goes to die. At least the Ikea city aims higher. Yet it all looks like the privatisation of planning. "Governments have shown they aren't very good at town planning. But corporations have rarely done better," reasons De Boer. "Like all Ikea design, maybe Ikea cities look better in the brochure than in real life?"

The Corporate-villes

LandProp's – Ikea's property arm – isn't the only example of a major retailer getting in the business of developing towns. As well as Tesco's Bow plans, Sainsbury's has recently completed its 2.6 hectare Vizion development in Milton Keynes which, as well as a huge store, includes not-for-profit community spaces, office and commercial buildings and 441 homes.

Famously, in the 1990s, Disney developed Celebration, a town adjacent to its theme-parks in central Miami.

Built as an idealistic dream-town, it's been compared to the set of The Truman Show. Also in Florida is a new college town – Ave Maria – part-funded by Domino's Pizza founder Tom Monaghan.

Though unaffiliated with the pizza firm, Monaghan – a Catholic philanthropist – envisioned the town and university as a Catholic utopia.