La grande folie: Paris's answer to the Gherkin delayed by the downturn

Five-year wait for opening of landmark skyscraper – the centrepiece of Sarkozy's plan to turn French capital into a financial rival to London
Click to follow
The Independent Online

Nicolas Sarkozy's plans to create a Parisian financial centre to rival the City of London have been hit by a year-long delay in the completion of a €1.1bn (£870m) iconic skyscraper.

La Phare – The Lighthouse – is the centrepiece of the French President's drive to reinvigorate La Défense, which Paris boasts is the biggest business district in Europe. At 145,000 square metres, La Phare will provide three times more office space than the Gherkin.

However, a mixture of technical difficulties and the slowdown in the commercial property market has delayed the opening until 2013. The skyscraper, which at around 300 metres would be only slightly shorter than the Eiffel Tower, is being developed by Unibail-Rodamco, Europe's biggest property company.

Some analysts believe that Unibail-Rodamco will confirm the delay in its interim results statement on Thursday, perhaps with news of slowdowns in other parts of its building programme.

Patrick Tondat, deputy managing director of Etablissement Public pour l'Aménagement de la région de La Défense (Epad), which manages the area's regeneration, said: "The project is very complicated technically. The tower will be built on railways and will have several connections to the metro, a shopping centre and parking spaces. It makes it very hard to realise. But the office market is fine at La Défense."

However, analysts said the prospect of building a speculative – without tenants secured – development in the current market, where few companies are looking to expand, had forced the delay on Unibail-Rodamco. Marlene Benon, a property analyst at Nataxis Securities, said: "Projects with an expected delivery of about 2011 – for example, La Phare – are the most risky."

Chet Riley, property analyst at Lehman Brothers, added: "I have no problem if Unibail-Rodamco slows down its development programme; I think they will. It's likely some developments might slip further."

Mr Riley forecasts that Unibail-Rodamco's revenue from renting out floor space will have grown slightly from €536m to €557m when it announces its half-year figures.

La Phare's delay, according to a property industry source, is also motivated by losing "first mover advantage". That is, other buildings are likely to be completed earlier, meaning that they snap up the few companies looking for new or additional offices.

However, La Défense secured a coup on Friday, signing an agreement for Société Générale to take 40,000 square metres in a building to be ready in 2010. Mr Tondat said SocGen had been "hesitating" between Paris and London but eventually decided to take a fourth building in La Défense.

Unibail-Rodamco could not be reached for comment.

Housebuilder Barratt has received interest from 10 parties for its Wilson Bowden commercial property arm, which it hopes to sell to help pay off its £1.7bn debt burden. Tim Edghill, European director at Jones Lang LaSalle, which is running the auction, said he was "dead chuffed" with the response after the deadline on Friday.



Comments