Cost of building tall towers in London up by 40% in five years, T&T says

The cost of building tall towers in London has gone up by 40% in five years, a report from Turner & Townsend has said.

A report into building skyscrapers in London, New York, Seoul, Tokyo, Mumbai and Dubai said the cost of building them in the capital was now more than three times as expensive to build skyscrapers in the city as it is in Seoul, and ten times as it is in Mumbai.

It added: “This significant cost rise is the result of a range of factors that include price inflation prompted by conflicts and geopolitical events, significant regulatory changes, enhancements to the product, and challenging trading conditions following Brexit.”

But T&T said “demand for high quality, sustainable space remains strong, and confidence is beginning to return, with some large investors using their ability to take a longer-term view to get their towers into a favourable letting market”.

It added: “As a result, it is still possible to deliver a high quality, financially successful skyscraper in London but only if project teams work together to address viability issues from the outset.”

T&T said the shape of a skyscraper is as important as the height when it comes to the overall cost.

“In a city like London, there can be a 25% difference in price between the most ambitious and the most cost-efficient projects, with massing being a key determining factor,” it said.

Steve Watts, head of tall buildings at T&T Alinea, added: “Demand for tall buildings globally remains incredibly strong, although the latter in London has suffered a difficult period.

“With elevated construction costs further pressured by continuing inflation, as well as unfriendly financing conditions and softened yields, viability is now the most pressing issue, and doing ‘more with less’ is the order of the day in a lot of markets, particularly London.

“Now more than ever, it is important to recognise that shape is as important as height when it comes to delivering a project cost efficiently, and there is an ever-increasing focus on ensuring tall buildings are integrated into the broader cityscape, whether that is by offering public amenities or a greater range of uses on the ground floors.”

Meanwhile, Mace has been formally confirmed to build a 250,000sq ft office on London’s South Bank being developed by Stanhope.

The firm bought the site from Landsec last year, having been stalled for several months while Landsec reviewed its office building progarmme in the capital.

The £200m scheme, design by architect BIG, is due to finish in early 2029 with main construction work beginning this autumn. Morrisroe is already on site carrying out piling work.