New research by CBRE has found that the resurgence of high rise living – driven by a need to build up rather than out – means that 13,600 residential units are currently under construction in new towers in London, with a further 70,000 units now in the planning pipeline. That’s enough to meet the Mayor of London’s housing target for two years.
The move towards constructing taller residential towers has been ignited by an upsurge in land values in London, with a consequent need for developers to be more efficient with their sites.
Tower developments are increasingly synonymous with luxury living and being higher up can add substantial value to units. This means that end values can more frequently support the higher build costs attached to towers.
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The research also found that towers are emerging in clusters. This is driven in part by planning policy, which drives tall buildings to the central activity zone and opportunity areas. It also guides them away from sites in the viewing corridors designated in the London Plan, which guard views of the river and existing skyline.
CBRE has also found that clustering is driven by local values, with locations close to the river particularly attractive to buyers and, therefore, to developers.
Mark Collins, Chairman of Residential at CBRE, said: “Towers are valuable instruments for providing much needed homes. In the last decade, tower schemes have generated just under 10,000 new homes, but there now are 13,600 currently under construction and a further 70,000 units in the planning pipeline, all of which can help to play an important role in meeting the requirement for new homes in the capital.”
Jennet Siebrits, Head of Residential Research at CBRE, added: “As London’s skyline continues to grow, we have seen an array of towers being submitted for planning, under construction and now completed right across the capital. Despite the higher build costs associated with developing high-rise, developers have recognised the increased premium that these developments can expect to enjoy, making them increasingly viable.
“Through examining the unit by unit pricing of 15 current and recent schemes across a range of price points and specifications, CBRE has calculated an average price premium per floor of 2.3%. The largest ‘tower premium’ was achieved on the highest specification and value product, ranging between 1.3% and 3.25%.”
Stuart Robinson, Chairman of Planning at CBRE, added: “In London we have a tradition of setting broad guidelines for the clustering of tall buildings, so that they do not harm important views. This requires a high standard of design, so that London’s skyline is enhanced.
“This approach will come under increased pressure in the future, as we will increasingly need to create higher density in our city in order to meet London’s housing need.”
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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