Russian developer has big plans for €3bn complex in Paris suburb
RUSSIAN developer Hermitage has a project for Paris that would outdo London.
It's planning a complex costing about €3bn on Paris's outskirts to elbow out the London Shard from its spot as western Europe's tallest skyscraper.
The project with two 320 metre-high (1,050 feet) towers in the La Defense business district, 11 metro stops from the Notre-Dame cathedral, will house luxury apartments, offices and a five-star hotel.
The structures would surpass the 310 metre-tall London Shard.
In the French capital, only the Eiffel Tower will be taller. "You'll be able to see the buildings from every part of the city," Emin Iskenderov (37), the Russian chief executive officer of Hermitage, said in a September 12 interview in his Paris office.
"We hope before the end of this year we're going to finalise the financial agreements, and we're going to start the project this year."
The conception of the buildings, France's first skyscrapers to combine offices, apartments and a hotel, coincides with dropping housing prices and office rents in the country.
The French economy will barely expand for the second year in 2013 amid Europe's financial woes, and as Socialist President Francois Hollande and his predecessor Nicolas Sarkozy raised the tax burden to a record to trim the budget deficit.
"In a difficult period, it's not an obvious project to develop," Olivier Gerard, the head of commercial real estate services firm Cushman & Wakefield France, said in an interview.
A multipurpose tower "is a very difficult building to develop because of security issues and different flows of persons within the building," he said.
In 2010, architect Jean Nouvel abandoned his plan for a 301-metre high signal tower combining offices and apartments in La Defense after failing to find investors.
Iskenderov is undeterred, pointing to the success of the mixed model in Asia and the Middle East. So-called mixed-use buildings have been thriving in China, the US and Dubai, home to the world's tallest skyscraper, the 828-metre high Burj Khalifa building, according to Skyscraperpage.com.
Alexander Kraft, Chairman and chief executive of Sotheby's International Realty for France & Monaco, said Iskenderov may be right.
"They really plan to have services that you don't get anywhere else today in Paris," he said. "Owners will have all access to the luxury hotel services, maid service, room service, etc.
"If all this becomes true, I think there can and probably will be a new market for it, but it has to be done right. You will have incredible views over all of Paris," he added.
The Foster & Partners-designed French complex – to be named The Hermitage Plaza – will have towers of 85 and 86 floors and is slated to be completed by early 2019, Iskenderov said.
Hermitage got permits for the two towers overlooking the Seine river and four smaller buildings in March 2012, according to Epadesa, the authority overseeing La Defense developments.
The project envisages 165,000 square metres of apartments, 35,000 square metres for the hotel, 40,000 square metres of offices and 40,000 square metres of shops and restaurants.
Paris-based Bouygues will probably build the Hermitage towers as they've been "accompanying" the developer on the project over the past five years, Iskenderov said. Bouygues says talks with Hermitage on the project are continuing.
Hermitage plans come as the property market in the Paris area is softening.
The average apartment price in Neuilly-sur-Seine, a wealthy suburb near La Defense, edged 2.9pc higher in the second quarter from a year earlier to €9,320 per square metre, according to notaries and national statistics office Insee. In the sixth arrondissement, Paris's most expensive, the average price fell 8.8pc to €12,000 a square metre.
The take up of office space in the Paris region will probably fall 20pc this year, according to Cushman's Gerard. The vacancy rates in the greater Paris area stood at 7.8pc, and at 12pc in La Defense, which had a record 422,136 square metres in available office space at the end of the first half, the consultant said.
French builder Vinci is due to complete next year the D2 tower for units of Bouygues and Societe Generale, and a hotel with 343 rooms for Union Investment in the business district.
Eiffage is building the 195-metre-high Majunga office tower for Unibail-Rodamco in the same area. Unibail isn't in a rush to build more offices. Construction has yet to start on its office towers in La Defense – the Trinity and the Phare – set to be completed in 2017 and after 2018 respectively.
Hermitage will invest €853m, with a "leading international bank" joining Russia's state-controlled Sberbank last month to provide financing, Iskenderov said.
The sale of penthouses of about 180 square metres at a price of about €3m each will help make up for the rest, he said. "In my view, this project is really targeted almost 100pc toward foreign buyers, first-time buyers who really want to have peace of mind, who don't want to renovate in Paris, who don't want to be bothered with maintenance and upkeep, and who are really looking for all the services they have in Hong-Kong, Moscow, Tokyo, etc," said Sotheby's Kraft.
Hermitage is also in talks with three of the world's largest five-star hotel chains, and plans to select one for the tower this year, Iskenderov said.
He dismissed concerns that investors might not want to buy luxury apartments in a business district outside of Paris. The skyscrapers will be located next to the bridge across the river Seine that links La Defense with Neuilly, where properties can cost as much as €14,000 a square metre, Iskenderov said.
"The Paris market is very poor for luxury apartments," Iskenderov said.
"When you see the London market, the New York market, the Miami market, you have a lot of choice." (Bloomberg)