London gets taller
Gráinne Gilmore, UK head of residential research at Knight Frank, looks at the city’s new trend in luxury buildings
The next wave of development across London’s most desirable districts is set to change the city’s skyline.
There are more than 100 residential developments including one or more ‘tall towers’ – buildings of more than 20 storeys – currently being built or in the planning process in the UK capital, as revealed in our new report.
This new wave of residential towers marks a shift from the last few decades when the idea of the poor quality high-rise blocks erected in the 1960s and 1970s led to a backlash against ‘building up’ for housing.
So why now?
London’s master planners have become more open to granting permission for tower buildings over the last decade. This is evidenced by the recent completion of the Shard, the 95-storey mixed-use tower.
This may be overshadowed by many towers in Asia’s cities, but it has taken the crown as the tallest residential tower in Europe.
Good design is critical for tower schemes.
Developers would have to bear in mind that their plans must be to the highest specification, and preferably architecturally cutting-edge to achieve permission, said Barton Willmore, who contributed to our report.
A commitment to the area around the building, such as providing public plazas and walkways, is also key.
Building up also comes with its own challenges for developers.
Tower construction can lead to a hefty increase in construction costs, with an average 43 per cent rise in build costs per square foot between floors 10 and 50, according to consultants EC Harris, who also contributed to our report.
This comes from the increased cost of design, the added time and cost of getting materials to the workface in the middle of busy city, increased labour costs involved in getting workers higher and higher up the workface, and the need for a better quality of cladding to withstand higher wind loads, among other things.
Unlike other development models, a tower’s construction cannot be phased in, thereby tying up large capital sums. As such, the typical high-rise developer is one with access to a large amount of equity.
Developers funding a scheme from their balance sheets can set their own agenda, but where they are relying on bank lending or other sources of senior debt to fund the development, the conditions are more onerous.
While towers are challenging and expensive to build, they are still attractive to residential developers because they offer a chance to add value when a tower is built in the right place to the right specifications.
Our research showed that the typical uplift in price per square foot in a residential tower in London is 1.5 per cent per floor, excluding penthouse apartments; once penthouses are included, the average increase rises to 2.2 per cent per floor.
There is real demand for apartments offering a slice of London luxury and unrivalled views across the city, particularly from buyers from the US, UK, Asia and the Middle East.
And while international buyers from leading global cities, such as Shanghai, Hong Kong and New York, understand tower living, sales of apartments in recent London tower schemes suggest Londoners are quickly becoming more familiar with living on double-digit floors.