Thanks to EuromÃ©diterranÃ©e, France´s biggest infrastructure project to date, provincial Marseilles is preparing to compete with Paris for foreign property investors. As a leading open-ended real estate fund manager with a tradition of strong exposure to the French market, DIFA Deutsche Immobilien Fonds AG has a significant involvement in this coastal city.
The Hamburg-based company is developing a 4-star hotel with 200 rooms in Marseilles for the international Radisson SAS chain. Situated on the Quai de Rive Neuve by the old harbour, the hotel is due to open for business by February 2007 at the latest. DIFA has invested approximately 38 million euros in this project in the heart of the historic Old Town. The vendor is French project developer Elige, a subsidiary of Vinci, the world´s biggest construction group. Elige acquired planning permission in conjunction with Radisson back in 2002. Radisson´s lease runs until 2027 and includes an option to extend for a further ten years.
The Radisson SAS is the second new-build project in Marseilles that DIFA has acquired during development for its DIFA-GRUND open-ended real estate fund (ISIN DE0009805515). The Espace Gaymard office block, which represents a total investment of some 23 million euros and forms part of the EuromÃ©diterranÃ©e office zone, was completed in 2003 and is fully let, with the average lease running for nine years.
Conditions favourable for market entry
'The office block and hotel development project have helped us establish a solid Marseilles portfolio at a favourable time.' That is how DIFA board member Dr. Reinhard Kutscher describes an investment strategy that recognised the potential for an upturn in Marseilles as early as three years ago. The new high-speed Paris-Marseilles TGV line, ambitious EuromÃ©diterranÃ©e urban development project and expansion of the port to become a major cruise terminal all underline the ambitions of this city with its 800,000 inhabitants. Working with cities like Barcelona and Milan, Marseilles aims to position itself as a location for advanced communication technologies, and the occupancy rate expectations for DIFA´s hotel project are correspondingly positive. 'The hotel market doesn´t currently offer the required capacity, particularly in the premium
segment. The fact that planning permission has been given for a hotel in this location highlights the emphasis on business and the importance of tourism for Marseilles, while at the same time creating the conditions for further growth of the city,' says Kutscher.
The scale of expansion required in Marseilles is most noticeable in the publicly-backed EuromÃ©diterranÃ©e development zone, which at 310 hectares is exactly twice the size of Hamburg´s huge Hafencity project. EuromÃ©diterranÃ©e borders on the TGV station and runs from Place Joliette parallel to the former warehouses of the Compagnie des Docks et Entrepts, which offer some 60,000 sq m of loft-style office space following their
conversion in the early 1990s. 'After completion in 2010 there will be around 600,000 square metres of office space at EuromÃ©diterranÃ©e. This exceptional growth has played an important role in helping Marseilles close the gap on the three biggest office markets in France, with the city now boasting total office space of 3.4 million square metres,' comments Kutscher.
Projects in Brussels, Barcelona and Paris also on track for success
DIFA tuned into the city´s optimistic mood at precisely the right time with the nine-storey Espace Gaymard new-build project, one of the first office buildings in Marseilles to meet modern, flexible needs. The approximately 10,000 sq m of space have been fully let since January 2005 to big-name tenants in the financial services and communications sectors such as SociÃ©tÃ© GÃ©nÃ©rale, Credit Lyonnais and UBI. According to Kutscher, 'Investors with sound local market knowledge can obtain good returns by timely involvement in ongoing project developments ahead of an anticipated
upturn.' In May 2004 DIF