With 70 towers currently under construction in London and another 102 with planning permission, the skyline of London is changing. Our trend towards residential towers cannot be denied, but why the strong move to tower-living?
Already home to Burj Khalifa, the world’s tallest free standing building that stands an impressive 163 floors (or 829.8m) high, Dubai has now announced plans for the world’s tallest residential tower too: Meydan One. At 711m high, not only will this feat of architecture include the world’s tallest residential skyscraper, but it will also house the world’s largest indoor ski resort, a marina, navigable canal, beach and bike trail. Only in Dubai, hey!
Both of these towers will completely dwarf the more modest ones that are sprouting up here in London, with the tallest tower currently under construction a mere 59 storeys (One nine Elms and The Diamond Tower jointly share this honour). However, our general trend towards residential tower living cannot be denied. In fact, over 10,000 homes have been built in towers in London over the last decade and this number is only growing; there are 70 towers currently under construction which will provide over 20,000 units when completed. In addition, there are a further 102 towers with planning permissions which will provide in the vicinity of 24,000 units and 29 under application, set to provide another 7,000. And these towers are getting taller; the tallest tower in the pipeline is Landmark North at 75 Stories.
So, why this strong move towards tower-living? Most obviously, of course, is our ever-expanding population and the increased strain this puts upon residential supply. Towers are a way for developers to continue to operate against increasingly restricted land supply and the resulting soaring land costs. Then there is globalisation and the transient workforce that has created – it is not uncommon for young professional to work and move to Singapore, Hong Kong, New York and many other global cities, where tower living is the norm, to work for a few years. By the time they return to London they have become accustomed to tower-living and have gained an appreciation of its advantages. And the advantages are many, with most towers positioned in central locations allowing easy access to the city centre and consequently shorter commutes – not to mention the astonishing views.
Perhaps that is why our research suggests that towers attract a premium of 2.3% per floor, a 3.5% premium for anything above the 20th floor and a further overall premium of 36% over local embedded value. However, this additional value doesn’t come without a catch. There is of course a much higher build cost and all or nothing approach to building a tower. Added to which, there are the planning issues. In particular, there are a number of viewing corridors to contend with and towers can often evoke strong local reactions.
However, despite these hurdles London is undoubtedly growing vertically as opposed to horizontally, and will continue to do so. Our towers may not be 163 floors high as yet, but they certainly are growing.