"From the beginning, it was all a question of cost because the film is very, very expensive," says French director Christophe Barratier of the $38.2m budget for Faubourg 36, the follow-up to his hugely successful 2004 film, The Chorus. "You can't find the Paris of the 1930s in Paris itself anymore. It's completely disappeared," says producer Nicolas Mauvernay. "We had to build it from scratch."

The film-makers scouted Bulgaria, the Czech Republic, Germany, Romania and Spain looking for a prudent solution. Despite lower costs found further east, and in the face of Hungary's 20% tax rebate, the producers settled on the Czech Republic as they believed the country offered the best balance between cost and quality. The film-makers estimate the cost of shooting in Prague is nearly 40% cheaper than shooting in Paris. "It's not as cheap as it could be in Bulgaria or Romania. But I don't want to shoot for the lowest price, because always you regret it in the end," Barratier says.

Mauvernay said the only regret they had was that the Czech Republic offered no incentives. The relatively low costs of construction allowed the producers to attach US DoP Tom Stern, a long-time collaborator with Clint Eastwood on films such as Flags Of Our Fathers, Letters From Iwo Jima and Million Dollar Baby and whose name will help market the film to foreign buyers. "What Christophe wanted was a little bit of a fantastical ultra-realism," says Stern of his approach. "He wanted to mix the thread of (production designer) Jean Rabasse [The City Of Lost Children]... with what I do a lot, which is what I like to say is an aesthetically pleasing realism."

Constructing sets which recreated 1930s Paris allowed the film-makers to control the palette of the film, which will have a muted, antique look. "We did only two weeks in Paris and it was a real nightmare," says Rabasse, "Paris was very dirty at this time [1936]. Now it's like a museum." Mauvernay says 25% of the project's budget went into building sets. Workers built a 300-seat theatre, complete with functioning backstage and moving set pieces, inside a 5,000 square metre hall at the former Avia Letnany aircraft plant in Prague. Across town they constructed a $2.7m, two-hectare set including 40-metre-tall buildings, in a field leased from local owners.

The story takes place in a working-class suburb of Paris during the rise of the left-wing Front Populaire, as out-of-work theatre professionals take over a music hall. Although not a musical, the film features several song-and-dance numbers. Shot in French, it stars Gerard Jugnot, Maxence Perrin, Kad Merad, Pierre Richard and Nora Arnezeder. Some 70% of the budget comes from the French side: co-producer Pathe Renn Production is handling international sales. Galatee Films is the production company, with Canal Plus, France 2 and France 3 contributing funds. Constantin Film is the German partner, contributing 20% of the budget, and Blue Screen Production represents the Czech side with 10%. As an international co-production, the film received $950,000 (EUR700,000) in Eurimages support.

With the exception of Stern and the Czech head of construction, the department heads on the film are French. Barratier praises the Czech technicians and singled out his 250-plus extras, who he says undergo long rehearsals in costume without complaint, although he admitted the language barrier was sometimes an issue. The production is set to wrap in mid-October. Post will be done in France - it will take several months of complex CGI work to add the industrial skyline.

Christophe Barratier's Cultural Life Favourite recent book: The Big Picture by Douglas Kennedy. Favourite recent movie: Little Miss Sunshine. Favourite websites: Amazon. Inspirations: Walking, with my iPod.