Asian Capital Flowing Into Paris, La Défense Redevelopment Projects
JLL is reporting that the Paris-based La Défense redevelopment project, with 3.4 million square meter of office space, 1,500 headquarters and 180,000 employees, is becoming Europe's leading business district and is the 3rd largest office market in the world.
In recent years, many investors seeking value-creation opportunities have invested in La Défense. This market offers investors a highly attractive, mature and liquid market with redevelopment opportunities and is a target for major international occupiers.
As an example, Beacon Capital Partners bought AXA's former tower as a redevelopment project as part of the "La Défense Renewal Plan". The new tower, named "First" was immediately leased to EY and Euler Hermès and achieved peak market rental values.
Over the last 10 years, international investors have accounted for two thirds of investments with La Défense as the preferred target. The largest deals also take place in La Défense with some exceeding the billion euro level, such as Cœur Défense which was sold to Lone Star in 2014 for €1.3 billion.New opportunities opening up on the doorstep of La Défense
The Les Groues district, in close proximity to La Défense, currently has no access to the public transport network (Métro, train, RER). However, due to the confirmation of new transport links including RER E and Métro line 15, this 76-hectare site is now the subject of a major redevelopment project and a total of around 630,000 sq m of space could be developed on this mixed-use site.
"The arrival of new transport links as part of the Grand Paris project will make it possible to develop a new district to the West of La Défense. The projects announced for this site and in La Défense will be a boost to the business district and will create new investment opportunities for international investors" explains Virginie Houzé, Research Director at JLL.
Les Groues has similarities to the Ram Brewery redevelopment in West London which was acquired by Chinese investor, Greenland, for mixed-use development.
Plans for the 3.13 hectare Ram Brewery site include the development of over 600 new homes including an iconic 36-floor tower with 166 apartments and 9,500 sq m of retail space for stores, cafés, bars and restaurants to complement the existing buildings.
Over the medium term, the economic development model sought for La Défense is similar to that applied to major international and American clusters: quality of life, technical innovation and partnerships between universities, start-ups and major corporates.
The wider La Défense area therefore needs to combine a number of critical success factors: housing supply, efficient transport, variety of housing stock, higher education, close links with decision-making centres and major international corporates.
Over the last three years, Asian investors have already been actively investing in Paris. Around 10 significant transactions have been carried for offices, retail and hotels. Chinese institutions, such as sovereign wealth funds or insurance companies, have taken positions on real estate as an asset class in its own right and have their sights firmly set on the French capital.