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French Government Sells Historic Properties to Curb National Debt

By Craig S. Smith


For sale: history, with a view.

France is selling dozens of historic properties in Paris and the provinces, using the proceeds to move government bureaucrats into less expensive properties and to help pay off the national debt.

So far it has unloaded dozens of chateaux, villas and “hotels particuliers,” the stone mansions of the golden age of Paris.

Foreigners, American pension funds and private equity firms are the biggest buyers so far. For all their Gallic pride, the French seem happy to have anyone take them off the hands of taxpayers.

“All the locations are great, and they are all beautiful pieces of real estate,” said Eric E. Sasson, European head of real estate for the Carlyle Group, the global private equity firm that has bought several properties.

Soon on the block: the Hotel Majestic, once a huge luxury hotel in central Paris that Hitler seized for his military government headquarters in occupied France. France’s foreign ministry took over the building after the war and used it for diplomacy: The Paris Peace Accords ending the Vietnam War were signed in its chandeliered ballroom.

France is overburdened with its opulent patrimony. The state has more castles, manors and monumental buildings than it knows what to do with, and can hardly afford to properly maintain them. The country already spends 2 billion to 3 billion euros ($2.65 billion to $4 billion) a year to maintain its properties.

It has transferred some property to provincial governments, along with the headache of upkeep. Work on hundreds of other sites has been suspended for lack of funds.

Because they are merely users, not owners, individual ministries have had little incentive to spend on periodic renovations. When budgets get tight, building maintenance gets cut. The result is worn interiors and crumbling facades.

The gothic Saint-Jacques Tower in the Fourth Arrondissement of Paris has been covered with scaffolding and sheeting for years, in part awaiting money to finish its refurbishment. Other buildings are maintained on the outside but are a wreck on the inside.

“There are castles in the Loire that are practically in ruin,” said Jean-Louis Dumont, a Socialist parliament member.

So acute is the crisis that in September, the prime minister of France, Dominique de Villepin, pledged 70 million euros ($92 million) a year in emergency funds to help cover the most critical work of keeping France’s heritage from falling down.

The government, meanwhile has embarked on a program to sell some of the buildings used by its ministries. According to a 2006 government study, the state holds more than $50 billion worth of property, not including those buildings considered priceless, like Notre Dame. About $20 billion of the state-owned property is used for government offices. The Finance Ministry concedes that their valuation of the properties may be “slightly below the market.”

It has already sold buildings worth more than $1.6 billion, including more than $800 million last year. Daniel Dubost, the finance ministry official overseeing the property sales, expects the program to continue at the current pace for years.