London skyline to be reshaped by residential towers

London’s skyline is set to be re-defined by a new wave of residential towers over the next decade, with 25 scheme currently under construction and a further 78 with planning permission, a new report has found.

The report by Knight Frank, EC Harris and Barton Willmore says there are currently 25 residential schemes under construction in London, which include one or more residential or mixed-use towers, with a further 78 such schemes with planning permission.

The report says there can a clear cost versus value benefit of building higher in certain locations across London’s largely low-rise skyline when the tower scheme is built to the correct specifications.

The report, which examines the key planning, construction and funding challenges inherent in building tower schemes, including the additional costs of building ‘up’, als found that:

• The typical uplift in price per square foot in a residential tower in London is 1.5% per floor, excluding penthouse apartments. Once penthouses are included, the average increase rises to 2.2%
• The incremental increase in the cost of building ‘up’ is greatest in the 25-40 storey band
• Funding remains a key issue, with high levels of pre-sales demanded in many cases.
• Despite widespread political acceptance of the benefits of tall towers, planning permission can be difficult to obtain

Stephan Miles-Brown, head of Knight Frank residential development, said:“This is London’s decade of towers: with residential land values up 20.3% in the last twelve months and a population boom, a need for the most effective use of space is evident.

“However, only 30% of the schemes including towers with planning permission are underway – partially a symptom of the challenging funding climate. The well-designed, centrally-located towers we will see succeed in the next few years will have a definite cachet – the clear premium for living at the top is a key driver in the development of a tower.”

Paul Cohen, partner at EC Harris said: “We are continuing to see a complex inter-relationship between land values, construction costs and sales values on many high rise schemes. The need for properly thought out sensitivity testing of varying heights, building shapes and efficiencies is key to project optimisation.”