The mayor of Stockholm, Sten Nordin, announced the move on Tuesday, saying a tie-up with Ikea and its housing wing Ikano Bostad could create more than one thousand jobs, as well as more than 550 much-needed apartments in a city that attracts 10,000 new residents a year.
The development also aims to transform a disparate area fringed by thorough-fares and stretching into the verdant southern suburb of Enskede.
"There are really five quite different neighbourhoods that we are trying to tie together," Söderstaden ('Southern City') project manager Gerd Comstedt told The Local.
The Ikea-developed housing will be tucked into the southern corner of the new neighbourhood, up against the imposing facade of the soon-to-be-finished Tele2 Arena.
Today, the surrounding area is a concrete maze of overpasses, major roads, parking garages, and a shopping mall.
The wide public walkways are all but abandoned at night if there isn't a hockey game drawing in rowdy crowds to the Hovet sports hall or international stars like Jay Z or Swedish House Mafia filling up the Globe Arena, a Stockholm landmark resembling a golf ball dropped by a giant on the southern fringe of the city.
"We want people to get off the train at Globen even when they are not going to a specific event," said Comstedt when explaining plans to invite new restaurants, shops and bars to the area to coincide with the building of new homes.
For Ikea, part of the project's allure is the prospect of adding a third Stockholm warehouse to two existing suburban ones, while the city's politicians have long looked to revamp the area in a bid to ease Stockholm's desperate housing crunch.
At present, the wider area sits at an odd crossroads between the city and the suburbs.
"We want to tie it in with Skanstull and move the city southwards," Comstedt said, referring to the neighbourhood on the southern edge of Södermalm island.
See images from the area as it stands and a mock-up of the new neighbourhood.
A few minutes north of the proposed development, residents increasingly complain about the Gullmarsplan square being overrun by alcoholics and petty criminals.
"The focus on Gullmarsplan will be to add office spaces. Stockholm has a geographical imbalance when it comes to business, with many people commuting to the northern areas to work," Comstedt said.
Gullmarsplan is where the Nynäsvägen road, the metro's green line, and the Tvärbanan tramway intersect.
"Gullmarsplan is a commuter network nexus and in the long-term we want it to become even more important," Comstedt explained.
Just to the south, the Slakthusområdet area of food warehouses and industrial-scale butchers has long enticed developers who view it as a potential equivalent to Manhattan's refashioned upscale Meatpacking District.
At present, it offers an odd mix of businesses and organizations. Sweden's deaf association sits next to an exotic pets and reptile shop, while a few letters of the iconic Slakthusområdet neon sign are out of order. A few days ago it read Lathusområdet ('Lazy House' rather than 'Slaughter House').
"The trucks are so tall that they regularly knock out a few of the letters," Comstedt said.
"But we are definitely keeping the sign because it's so appealing."
Many of the businesses are staying, but there is talk of moving a cluster of key food establishments to an area further south in Farsta.
Many of the buildings inside the sprawling area will be deemed historic landmarks (K-märkt) and kept intact.
City hall is hoping to add more than 3,000 apartments in the area, said Comstedt, but there is as yet no word on how many will be cooperative flats (bostadsrätter) and what portion will be allocated to the rental market (hyresrätter).
"If everything moves forward without any hiccups, we hope to have our plan for the area ready by late 2015," Comstedt told The Local.
"The earliest we'll start building is 2016."
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