Paris pins growth hopes on ambitious rail network

For more than a decade, French planners have dreamed of an ambitious and expensive new rail network that would supersize Paris and turn it into a leader rather than a follower of global cities like London and New York.

Today, the Grand Paris Express – one of Europe’s largest transport projects – is starting to take shape. In dozens of sites in the region, construction work can be seen such as boring machines digging tunnels into the ground or machines pouring concrete to make the roof of a future metro train station.

Like most other major transportation projects, the Grand Paris Express has run into major delays as well as cost overruns of its initial budget of about EUR25 billion ($29 billion). The network of 124 miles of new metro lines in and around Paris is now slated to be completed in phases between 2024 and 2030, and financing problems or other issues could still derail the project.

But a number of energy sources are powering the Grand Paris Express, giving it more traction. These include the coming Paris Summer Olympics in 2024, and post-Brexit uncertainty that has hit London, Paris’s historical economic rival in the region.

Also, the Paris region is benefiting from one of the strongest commercial real-estate markets it has seen in years. That is stoking interest among investors, developers and tenants in new development opportunities tied to the new rail lines and 68 expected stations.

Already, the Grand Paris plan has contributed to rising property values in areas like Saint-Denis to the north of Paris, where Olympic housing and venues are being planned, and Villejuif in the south, where two train lines will meet.

“What can be almost certain is that the Grand Paris Express will benefit the existing good locations today, such as La Defense, but also some of the new hubs” like Saint-Denis and Villejuif, said Cedric Dujardin, head of real estate for France at DWS, a unit of Deutsche Bank AG.

Investors are jumping in. Last month, French investment firm La Francaise bought Le Balthazar, a 32,600-square-meter office building in Saint-Denis, for about EUR235 million, on behalf of Korean investors including Hyundai Investment Asset Management.

Also in June, a 24,000-square meter office building named #Curve, under construction near the future station in Saint-Denis, was bought by Generale Continentale Investissements, a French investor and real-estate developer, and UK private-equity firm Benson Elliot. The price wasn’t disclosed. (WSJ)