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Stephan Miles Brown
Tall Towers 2012 Londons High Rise Residential Developments
Tall residential and mixed-use towers in London are emerging as strong investment properties, with a new report by Knight Frank, EC Harris and Barton Willmore claiming that the buildings will increasingly define the capital's skyline over the next couple of years. The study, entitled 'Tall Towers 2012: London's High-rise Residential Developments', reveals that there is a clear cost versus value benefit to building higher in certain locations and to the right specifications. While there are unique planning, construction and funding challenges associated with building towers, they are proving to be a viable option to cope with London's swelling population. Currently, there are 25 schemes under construction in the city, including one or more residential or mixed-use towers, while a further 78 have planning permission. However, high levels of pre-sales demand are often required to secure funding, meaning it may not be easy to come by. Nevertheless, tall residential towers yield a typical uplift in price per square foot of 1.5 per cent per floor, excluding penthouse apartments. The addition of a penthouse increases the uplift to 2.2 per cent. According to the report, the incremental increase in the cost of building upwards is greatest in the 25 to 40 storey band. Tall towers are certainly poised to become a major feature of the London skyline and demand for the properties is increasing. Stephan Miles-Brown, head of Knight Frank Residential Development, explained: "This is London's decade of towers: with residential land values up 20.3 per cent in the last twelve months and a population boom, a need for the most effective use of space is evident. "However, only 30 per cent of the schemes including towers with planning permission are underway – partially a symptom of the challenging funding climate. The well-designed, centrally-located towers we will see succeed in the next few years will have a definite cachet – the clear premium for living at the top is a key driver in the development of a tower." The creation of more tall residential and mixed-use towers also feeds into the desire of investors to obtain properties that produce a positive monthly cash flow. Dr Rohan Weerasinghe, author, property investor and professional speaker, claims that the recession demands that income is found through rent, rather than capital growth.
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