Towers of A rising contribution to housing 2 3

London towers A brief history

Before the 1960s, skyscrapers were a rarity In the Noughties, there was a genuine buzz across London. For 250 years, St Paul’s being created around the development of London’s first residential Cathedral was London’s tallest building; it tall buildings. Coupled with the political towers were built in the was knocked off the top slot in 1962 by the encouragement of London Mayors there Post Office Tower. The lack of high-rise was a renewed desire by residential 1960s. There are 135 development mainly reflected legislation developers to build upwards. In 2006 that restricted building heights in the city. Aragon Tower in Deptford was refurbished towers in the planning The London Building Act in 1894 prohibited into London’s first private residential tower buildings over 80ft high, and became law as since the Barbican Development; a pipeline today a direct result of the construction of Queen landmark moment for London towers. Anne’s Mansions, a block of flats in Westminster. Among the many complaints, Residential housing was now at the Queen Victoria objected to the new building forefront of tower development. Led by blocking her view of Parliament from the private sector and built by famous Buckingham Palace. architects looking to make a statement, tall residential buildings began to dominate In the Sixties the height restrictions were the architectural agenda. For example, relaxed, albeit some restrictions remained Rogers Stirk Harbour + Partners’ NEO to preserve and safeguard historic views Bankside and The Heron by KPF. This of St Paul’s Cathedral, the Tower of London, trend accelerated as demand from and The Palace of Westminster. These South East Asian investors has become relaxations led to a small number of tall a driving force in the market. These buildings emerging in the capital. investors have long had a love affair with high rise living, and London developers London’s first residential towers arrived in have responded accordingly. the 1960s, built by local authorities to house social tenants. They were heralded Since Aragon Tower over 30 London as ‘housing of the future’ but soon became residential towers, of over 20 storeys in symbolic of ineffective public sector height, have been developed across housing and deprivation. London. A further eight residential towers are due to complete construction The lack of success of residential towers this year and another 31 are under meant the skyscraper boom of the eighties construction and due to complete by 2018. became largely a commercial affair, typified This will deliver 13,600 units. With 135 by the construction of towers at Canary towers in the planning pipeline and 60,000 Wharf. Given the economic backdrop this extra units, this amounts to around 76,000 was unsurprising; the UK was experiencing units, equivalent to around two years of a long period of economic growth and London’s house building target. The drive to London was becoming the world’s build up, rather than out, has been fuelled pre-eminent financial centre; it needed by rising land values and limited space, but buildings to reflect its new image. has been engendered by developments in Skyscrapers have long been associated technology and engineering. with the financial services industry, and as a demonstration of wealth. High rise towers appeal particularly to companies who want to make a statement. 4 5

Current tallest towers Future tallest towers

The Shard One Newfoundland Morello 30 Marsh Wall One The Tower, One St Stratford Halo The Heron Aragon Tower Tower Blackfriars George’s Wharf ‚‚Sellar Property ‚‚ ‚‚Ballymore Group ‚‚Genesis Housing ‚‚Heron Corporation ‚‚Berkeley Homes ‚‚Dalian Wanda ‚‚MW30 Ltd ‚ Group Group ‚‚Menta ‚‚St George ‚St George ‚‚Completed Autumn Association ‚‚Completed Summer ‚‚Completed ‚‚59 storeys ‚‚52 storeys ‚ ‚‚Completed ‚‚58 storeys ‚‚55 storeys ‚‚50 storeys ‚Completed Summer 2008 ‚‚Completed 2013 Summer 2006 ‚‚436 apartments ‚‚310 apartments 2013 Summer 2013 Summer 2012 ‚‚566 apartments ‚‚458 apartments ‚‚274 apartments ‚‚48 storeys ‚‚36 storeys ‚‚29 storeys ‚‚Permission ‚‚Application ‚‚50 storeys ‚‚43 storeys ‚‚87 storeys ‚‚Permission ‚‚Permission ‚‚Permission ‚‚736 apartments ‚‚285 apartments ‚‚158 apartments ‚ ‚‚10 apartments ‚213 apartments ‚‚Average £900 psf ‚‚410 apartments ‚‚Average £1,300 psf. ‚‚Average £415 psf ‚‚Estimated ‚‚For rental market £50m each

The Landmark Arrowhead Quay One Lansdowne Vauxhall Cross/ The Landmark Strata Pioneer Point Ontario Tower North (City Pride) (Waterside Road Vauxhall Square ‚‚Chalegrove ‚‚Brookfield ‚‚Empire Property ‚‚Ballymore Group House) ‚‚Brookfield Europe ‚‚Chalegrove ‚‚Guildhouse UK Ltd ‚‚CLS Holdings Properties Ltd Multiplex Group ‚‚Completed ‚ ‚‚50 storeys 87 Properties Ltd ‚Ballymore Group ‚‚55 storeys ‚‚50 storeys ‚‚Completed ‚‚Completed ‚‚Completed Autumn 2007 ‚ ‚‚243 apartments Summer 2010 Summer 2010 Summer 2011 ‚‚75 storeys ‚55 storeys ‚‚377 apartments ‚‚410 apartments ‚‚29 storeys ‚ ‚‚Permission ‚‚44 storeys ‚‚43 storeys ‚‚33 storeys ‚‚792 apartments ‚750 apartments ‚‚Permission ‚‚Permission ‚‚260 apartments ‚‚Permission ‚‚Application ‚‚647 apartments ‚‚310 apartments ‚‚267 apartments ‚‚Average £625 psf ‚‚Average £700 psf ‚‚Average £830 psf ‚‚For rental market

75

59 58 55 55 55 52 50 50 50 50 48 44 43 43

36 33 29 29 Barnet

Waltham Forest

Haringey

Redbridge 6 7

Havering Sticking together Viewing corridors across London Tall buildingBrent clusters

Towers haven’t emerged in a uniform fashion across London. This partly reflects planning policy; The states that tall buildings should generally be 41 limited to sites in central areas and opportunity zones. towers under construction Towers developments sit well in central locations as good access to transport links and infrastructure means the area can Islington cope with a rise in the numbers of people travelling to and from the vicinity.

High rise development is also constrained 135 Hackney by the viewing corridors which prohibit tall towers in the Camden Barking and building development and protect the river planning pipeline Dagenham and panoramic views. This allows planners to manage the London skyline.

As well as being planning led, the viability Newham of a development will depend on the area’s embedded value, which needs to support the higher build costs of tower schemes. Tower As such, tower schemes generally only Hamlets become viable in areas with a relatively high Westminster St Paul’s embedded value in excess of £800 per sq ft.

Ealing The river has also acted as a real magnet for high-rise living. Quite simply, the views offered by high rise living are augmented by an uninterrupted view over water. This adds to the desirability factor and can help underpin prices. In addition, high rise schemes maximise the value from the limited land supply in riverside sites. Indeed London’s first privateHammersmith residential tower, Berkeley Homes’ Aragonand Tower, Fulham is on the Thames at Deptford. Southwark These influences combined mean that tower schemes have developed in distinct Kensington clusters. One notable cluster is around and Chelsea Canary Wharf. In tandem with its high-rise office hub, there are a number of residential towers in the , with more in the pipeline in Canary Wharf itself. Greenwich New clusters are emerging along the Southbank and across the City. In these areas, land availability is scarce and building up is a way of optimising a sites value. Lambeth

Hounslow

Lewisham Bexley

Wandsworth

Richmond

Bromley

Merton

Kingston

Sutton 8 9

Building up Price premium average The additional cost of high rise

The funding of a tower scheme is very However, costs will be higher in central We analysed the pricing schedule of capital intensive. This reflects the ‘all London. This partly reflects higher site eight current well-designed tower schemes or nothing’ approach to development and abnormal costs, but also the higher and identified an average price premium lack of phasing opportunity. As a result, specification. In our experience the build over local embedded value of 36%. off-plan sales tend to be required to costs for higher specification developments This has remained constant since we forward fund the development. Generally vary widely, but tend to range between undertook the same analysis two a lender will require a third of units to be £300 and £500psf. We have calculated years ago. pre-sold before releasing any capital. the average build cost for an apartment in Moreover, UK banks are only willing to fund a London high-rise block of over 10 storeys, Height premiums are an important factor in 3.5% developers who are well established and will increase by around £20 psf per pricing high rise residential towers; broadly premium can show an exemplary track record. apartment, compared with a medium speaking the higher the apartment, the It is unsurprising that many towers currently rise block. higher the price. Height brings additional above floor 20 in the pipeline are being funded by views, more privacy and added exclusivity. equity rich overseas investors. However, there is evidence that the additional design and build costs We have examined the unit by unit pricing In addition, building up rather than out associated with tall landmark structures of 15 current and recent schemes, across brings additional build cost. There are a often can be recouped at end sales. a range of price points and specification, number of technical challenges to overcome If well designed and in appropriate ranging from a modest 26 storeys to a which increase build cost including locations, tall residential buildings can colossal 54 storeys. Our calculations slenderness ratio and the need for achieve significant premium values over show an average price premium per floor intermediate plant levels and enhanced other housing nearby; not only do they of 2.3%. The largest premium was achieved facade treatments. While the average build provide better views, but usually come on the highest specification and highest cost across London for a mid-range low hand-in-hand with superior and often value product, and the premiums ranged rise building is around £140 psf, it iconic architecture. between 1.3% and 3.25%. increases to around £250 psf for a high rise development. 1.5% premium up to floor 20 per floor Build costs per sq ft for mid-range specification (end value c£1,000 psf), average across London £220–£250

£180–£220

£140–£180

£100–£140

Low rise Low medium High medium High rise South Bank Tower (Less than 4) (Floors 5–9) (Floors 10–20) (More than 20) 10 11

High-rise Barnet Waltham clusters across Forest Haringey London Redbridge Havering We have identified four major high-rise Brent clusters in London. These are: 1. The City 2. Canary Wharf 3. Croydon Isling1ton 4. Southbank/Nine Elms Camden Hackney Barking and Between them, these clusters account Dagenham for around two thirds of all high-rise Newham development. Tower Westminster 2 Ealing 4 Hamlets

Hammersmith and Fulham Southwark Kensington and Chelsea Greenwich

Lambeth Hounslow Bexley

Wandsworth

CompleteRichmond

Under construction Bromley Permission Merton Application

Kingston Croydon 1 City 3 2 Canary Wharf Sutton 3 Croydon

4 Southbank/Nine Elms 12 13

The City

T

E

E ——There is limited land supply in the The Heron, EC2

R

T

S City and this is conducive to

H G

I high-rise developments ——First residential tower inside

H

H the Square Mile since 3 C T CITY ROAD I 4 D ——Demand is strong inside the square the Barbican

E

R

O mile, and therefore premium prices 5 H 15 S can be achieved ——36 storeys with 285 10 private apartments ——The area attracts a wealthy, young 7 professional cohort that demands ——Record prices achieved 11 C a high-end product for the location O M M E R 6 C IA L

S T

R

E

E

1 T

WHITECHAPEL ROAD

12 8 13 COMMERCIAL ROAD 9 2

THE HIGHWAY 14

Complete Under construction Permission Application

Scheme Developer Private units Storeys in tower

1 The Heron Heron Corporation 285 36 2 Altitude Aldgate BDWZest Developments 171 28 3 Lexicon Mount Anvil / Affinity Sutton 146 36 4 Canaletto London Groveworld Ltd 190 31 5 The Eagle Mount Anvil 206 27 6 Principal Place Brookfield Europe 243 50 7 Avant-garde Telford Homes 259 25 8 One Commercial Street Redrow London 145 23 9 Goodman’s Fields Berkeley Homes 164 23 10 Crown House Mount Anvil 302 39 11 The Stage The Estate Office / The Bards 385 40 12 Heron Plaza Heron Corporation 120 44 13 Aldgate Place Barratt London 313 22/25/26** 14 London Dock St George 1314 25 15 City Forum Berkeley Homes 410 36/42*

*3 Towers, ** 2 Towers 14 15

Canary Wharf

9 ——There is an established market for 24 high-rise developments with Canary EA ST I NDIA DOCK ROAD Wharf itself a core of high rise 20 25 commercial buildings 17 AS PE 26 N W 8 AY 13 ——The local planning policy is broadly in 6 7 favour of tower schemes 32 BLACKWALL 29 TUNNEL ——As with the City, Canary Wharf is 3 12 popular with young professionals who 18 want to live as close to work as possible. 28 30 17 Scheme Developer Private units in Storeys 15 2 21 This cohort embrace the advantages of tower 5 high-rise living 2 4 1 Aragon Tower Berkeley Homes 158 29 33 22 ——Views can be maximised as surrounding 2 Mastmaker Court Ballymore Group 57 23 10 11 areas are still low rise 34 23 3 The Landmark Chalegrove Properties Ltd 647 30/44* 4 Ability Place The Ability Group 361 22 16 A102 5 Pan Peninsula Ballymore Group 736 39/48* 6 Streamlight Swan New Homes 66 26 1 7 Ontario Tower Ballymore Group 260 29 8 The Gateway Galliard Homes 171 25 9 The Panoramic Telford Homes 90 21 10 Lincoln Plaza Galliard Homes 381 22/32* 14 11 Galliard 330 46 27 12 Horizons Telford Homes 131 26 13 Providence Tower Ballymore Group 368 44 Complete Under construction Permission Application 14 Creekside Village East Ampurius Nu Homes 147 23 15 Landmark North Chalegrove Properties Ltd 752 75 16 Asda - Crossharbour District Centre Asda Stores Limited c150 23 17 Dollar Bay Court Mount Anvil 111 31 18 - Master Consent Plc 1185 35** 19 Poplar Business Park Workspace Group plc 321 22 20 Blackwall Reach Countryside Properties (UK) Ltd 877 23** 21 - NE - N0206 Crest Nicholson 213 20 22 Greenwich Peninsula - NW - N0601/N0602/N0607/N0608/N0504/N0506 Knight Dragon / New World Development 1683 37** 23 GMV Tower Taylor Wimpey / Countryside 146 20 24 City Island Ballymore Group 1453 27** 25 Hoola (Tidal Basin Tower) Hub Residential 360 24 Baltimore Tower, E14 26 The Pump House City & Docklands Property Group 161 24** 27 Convoys Wharf Hutchison Whampoa Properties (Europe) Ltd 2975 48 ——One of only a handful of premium high 28 Newfoundland Canary Wharf Group 493 58 rise buildings to launch in E14 since 2008 29 30 Marsh Wall MW30 310 52 ——A significant premium has been achieved 30 54 Marsh Wall The Estate Office / The Bards 190 43 for height and the iconic architecture 31 Arrowhead Quay (Waterside House) Ballymore Group 750 55 added value 32 Helix Essential Living 320 29/35 ——The most recent sales have pushed 33 Greenwich Peninsula - SE - M0104 + M0121 Knight Dragon / New World Development 308 32 values in excess of £1,000 psf 34 Greenwich Peninsula - SE - M0103 Knight Dragon / New World Development 102 24

*2 Towers, ** Various Towers 16 17

Croydon

——Much maligned and overlooked, the regeneration plans are causing a real buzz about Croydon. The mayor has committed over £1bn to transform the economy and rejuvenate the town centre

——According to the council, Croydon needs 10 27,000 new homes across the borough in 3 order to meet demand. As a result the 2 planners are broadly favourable to large high-rise schemes W

E L L E 7 9 S L 8 ——Unlike the other tower clusters Croydon E

Y

R is not centrally located. However, it is O 6 A D only 15 minutes by train to the City. To

D 5 A attract the young professional market, 1 R O TOW D CHEPS 11 ROA Croydon needs the appropriate housing LAY BARC and infrastructure ER V O Y L F N DO 4 OY CR

COOMBE ROAD

Complete Under construction Permission Application

Scheme Developer Private units in Storeys tower

1 NAMA 170 26

2 Island Regency Homes 184 20

3 Berkeley Homes 414 45

4 4-20 Edridge Road Edridge Road BV 133 23

5 St George’s House Legal & General 265 28

6 Westfield Westfield Shopping Towns Ltd 540 25

7 One Lansdowne Road Guildhouse UK Ltd 377 55

8 Stanhope Plc 161 22

9 Morello Tower Menta 458 55

10 Royal Mail Site Royal Mail Group 171 21

11 + The Queens Gardens Essential Living 230 32 St Georges House, Croydon 18 19

Scheme Developer Private Storeys units in tower Southbank/Nine elms 1 St George Wharf - The Tower St George 223 50 2 Strata Brookfield Multiplex 310 43 3 NEO Bankside Native Land 217 24 4 Riverlight (Block 1) St James Group 93 20 5 The Corniche St James 168 27 ——The entire stretch of the Southbank is 6 Parliament House Telford Homes Plc 73 23 THE STRAND undergoing a huge transformation with 7 One The Elephant Lend Lease 284 37 around 16,000 new homes in the 11 3 8 Tribeca Square Delancey 373 26 27 12 planning pipeline 28 29 9 The Signal Building Jetco Investments 27 22 ——The Vauxhall Nine Elms Battersea 10 South Bank Tower CIT Developments 191 42 26 (VNEB) corridor has been designated as 11 St George 274 50 an opportunity area to provide economic 12 One Tower Bridge (Potters Fields) Berkeley Homes SE London 356 22 growth and much needed housing 30 13 Vauxhall Sky Gardens Frasers Property UK Ltd 180 36 24 ——The VNEB planning framework sets out a 14 Nine Elms Parkside (South London Mail Centre) Royal Mail Group PLC 1590 23 9 strategy for tall buildings, which supports 15 The Garden (New Covent Garden Market) VSM Estates Limited 2117 46 an emerging cluster at Vauxhall NE 16 Sainsburys - Nine Elms Lane BDWZest Developments LLP 623 39 W KENT ROAD VA 7 UXHALL BRIDGE ROAD 8 17 Keybridge House British Telecommunications Plc 405 36 6 23 2 ——The 28 towers in the pipeline will change 5 London’s skyline and position the 18 Vauxhall Cross / Vauxhall Square CLS Holdings Plc 410 50 22 Southbank well within the prime central 19 One Nine Elms (Market Towers) Dalian 436 59 21 London market 20 Vauxhall Cross Island Site Wendover Investments Ltd 225 41 20 ARK ROAD 21 Merano Residences (Eastbury House) St James 34 28 1 TON P 22 Prince Consort House St James 33 27 14 31 23 360 London (London Park Hotel) Essential Living 282 44 KENNING 4 18 24 Eileen House Oakmayne / South Central Management 275 41 16 CAMBERWELL NEW ROAD 14 17 25 Elizabeth House London & Regional Properties Limited 142 29 15 26 Canary Wharf Group Plc 779 37 13 27 Doon Street Tower Coin Street Community Builders Ltd 236 43 28 19-23 Blackfriars Road Circleplane 167 42 29 Sampson House + Ludgate House Carlyle Group 492 48 Complete Under construction Permission Application 30 Erlang, Milcote + Hill House Barratt London 270 31 31 New Bondway (Vauxhall Bondway/Octave Tower) McLaren Group 360 50

Computer generated image of Southbank towers by 2023 20 21

Luxury high-rise living The future of London’s housing

The necessity to build up rather than out, has encouraged a resurgence of high rise living. But in contrast to tower-blocks of the 1960s tower developments now symbolise luxury living and can add 2.3% substantial value to units. premium per floor

Soaring population demands and a rising market has led to an increase in land activity. The additional demand for sites has pushed land values up by 20% over the past year. psf This requirement for development land £20 across London, and the upsurge in additional build cost land values, has reignited the need for developers to be more efficient over 10 storeys with their sites.

In areas of short land supply, where end values can support the higher build costs, building up can optimise the land value. Towers are also valuable instruments for providing much needed homes. In the 36% last decade, tower schemes have premium over local generated just under 10,000 new homes. There are 13,600 currently under embedded value construction and a further 70,000 units in the planning pipeline.

Residential tower developments do not only provide much needed housing, they also benefit the local area. The tallest 8 towers with planning consent will contribute £110 million in S106 payments between them. The development of these towers will also provide much needed schools, health facilities, transport improvements, parks, community services and leisure facilities; all contributions to the wider area which would have been unfeasible without development. This is in addition to 420 affordable housing units, which also would not have been built. The towers of London are having a direct and positive impact on London.

Wood Wharf, E14 22

Jennet Siebrits Paul Savitz Lisa Hollands Mark Collins

Sources: CBRE, Molior, EGi Head of Residential Research Residential Research London Residential London Residential Cover image: views from The Panoramic Collection at The Heron Senior Director Associate Director Managing Director Chairman

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