Towers of London 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. South Bank Tower 4 5 Current tallest towers Future tallest towers THE SHARD ONE NINE ElMS NEWFOUNDLAND MOREllO 30 MARSH WAll ONE THE TOWER, ONE St PAN PENINSULA StRATFORD HALO THE HERON ARAGON TOWER TOWER BLACKFRIARS GEORGE’s WHARF Sellar Property Canary Wharf 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 PRINCIPAL PLACE 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 London Plan 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 Isle of Dogs, 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 Croydon 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.