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$3.4 billion mega-mall near Paris being planned despite opposition

Invest / Development Finance


May 23 2017

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Ania Nussbaum, Bloomberg

The only thing moving in the broad expanse of wheat, colza, corn and beet fields near Paris is a half-empty city bus trundling along a brand-new road. Overhead, the ever-present noise of planes disrupts the calm.

This is the future home, local officials hope, of EuropaCity, a 3.1-billion euro ($3.4 billion) shopping and leisure complex being developed by grocery giant Auchan Holding SA and Chinese billionaire Wang Jianlin’s Dalian Wanda Group Co. Among its planned features: a circus, a theme park and an indoor ski slope. It’s also the target of opponents including nearby mayors, environmental groups, farmers, malls and small businesses. More than a decade after planning began, it’s not clear when EuropaCity will be constructed.

Building big projects is always difficult, especially in France. Disneyland Paris opened 16 years after initial planning began and a new airport near Nantes has been held up by opposition for 55 years. The question is whether the recent election of Emmanuel Macron, arguably France’s most pro-business president in decades, can help placate the multiple opponents.

“Large-scale development takes time because it is so difficult to forge consensus,” said Mitchell Moss, professor of urban policy and planning at New York University. But EuropaCity “has the unusual situation of challenging agricultural, environmental, commercial and local interests,” thus unifying enemies.

Auchan and Dalian Wanda expect EuropaCity, which will have about 500 stores and 2,700 hotel rooms, along with conference centers and an urban farm, to create more than 10,000 jobs and attract at least 30 million visitors a year. That’s as many as the city of Paris, one of the world’s most popular tourist destinations, and would be twice the number of annual visitors to the Disneyland Paris theme park.

“We’ll fuel dynamism in nearby cities,” said David Lebon, development director at EuropaCity and ex-chief of staff for former French Economy Minister Arnaud Montebourg. “We’ll bring in a diverse population and change the region’s image by creating jobs and attracting the middle classes. This will help existing malls.”

Local politicians say EuropaCity will hurt two malls just a 10-minute drive away and is unlikely to generate the jobs pledged by promoters. They also worry about worsening traffic, despite the French government’s promise to build a new metro station there and the bus line that has already started running.

A group representing nearby businesses in March filed a court case against the project, and environmental activists led a protest at the site Sunday. More than 700 people danced, planted crops or just hung out on the grass where Europacity will be built, before going into Gonesse itself to demonstrate.  The collective won't give up the protest even if EuropaCity downsizes the project, said Bernard Loup, a leader of the movement, saying it will damage highly productive agricultural fields. 

The protesters did run into several teenagers who disagreed:  "We want EuropaCity, we want the businesses,'' said 16-year-old Anthony Awua. ``They will bring money to Gonesse."

A government-mandated 2016 report about the area between the Bourget and Roissy airports looked at the possibility that EuropaCity could fail entirely and recommended that the developers detail the economic model of the complex. Following months of debate between local actors, mandatory in France for large projects, another report concluded that many opponents found the plan wasn’t sufficiently integrated into the local urban context.

A group of eight mayors opposes it, concerned that the glitzy center will either cannibalize existing local stores or fail. Sales for small retailers grew more than in large supermarkets last year, and retail in general is hit by online shopping. In 2015, more than 10 percent of downtown shops in medium-sized cities were empty, according to a government report. 

“It’s a super-mall that goes against current trends,” said Jean-Christophe Lagarde, the mayor of Drancy, a town near the site. “People increasingly favor small shops over gigantic stores.” Large French retailers, including Auchan, noted the decline of big suburban grocery stores during their latest round of annual results.

The collective of environmentalists say they could generate opposition as strong as that against a planned airport at Notre-Dame-des-Landes in western France, which has been a thorn in the side of national governments over decades of planning. At times there have been violent clashes when police tried to remove demonstrators from the site. Occupants are still there. Macron's environment minister, Nicolas Hulot, has called the development an outdated investment because of its potential impact on climate change. His office didn't respond to a request for comment.

EuropaCity was first designed in 2006. Seven years later, Auchan said it would open in 2020 at an estimated cost of 2 billion euros. Now the target for opening is 2024, with construction to begin in 2019 and a price tag 50 percent higher than previously thought. Of the 3.1 billion euros, 2.5 billion euros will come from Auchan, according to Jean-Pierre Blazy, the mayor of Gonesse. Lebon said it was too early to detail the financing package. A public entity is buying the land from farmers before selling it to EuropaCity.

The election of Macron, who as economy minister two years ago pushed through a law allowing more stores to open on Sundays, bodes well for the project. One of his party’s candidates for the French legislative elections in June, sociologist Jean Viard, is a member of EuropaCity’s scientific committee. 

“EuropaCity investors had the support of Nicolas Sarkozy, and then Francois Hollande, whose deputy secretary-general was Emmanuel Macron,” said Blazy. “I think we’ll see continuity.” As for concerns that agriculture will be disrupted, “These lands are difficult to access for agricultural machines, and located between two airports and roads.”

Others place different hopes on Macron. Alain Boulanger, head of the federation of businesses that filed a complaint to block the project, said he expects the new president to help re-shape it. He hopes Macron will push to reduce the number of stores EuropaCity plans to build; estimating that with no change, 8,000 jobs will be lost in stores located near the site. Boulanger says he’s been in touch with members of Macron’s movement.

Lebon said he and Chief Executive Officer Benoit Chang are working on revisions for slower development. The snow park will be revamped to be more environmentally friendly, or even scrapped, he said, and new architects will be brought in to make the project look less like a “flying saucer,” as the mayor of Le Bourget called it. A cinema will also be added to boost cultural content. EuropaCity says it will introduce an updated version of the plan in the second half of this year.

For Dalian Wanda, operator of theme parks in China, movie theaters in the U.S. and a soccer club in Spain, EuropaCity will be among its biggest European tourism investments to date. Auchan already operates 3,800 stores in 16 countries.

The target is to complete EuropaCity by 2024 for the Olympic Games, which Paris is bidding to host. This is also when the new metro station will open nearby, as part of a regional development plan known as ‘Grand Paris.’ Auchan expects it to turn a profit before 2054. 

“Giving up is out of the question,” Chang said. “We’re building the next-generation shopping experience.”

SOURCE: Bloomberg


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