London skyscraper construction costs soar by 40% since 2020

A new report by Turner & Townsend reveals that London's tall building market is facing significant pressure due to a cost increase of up to 40% since 2020.

Shaping our skyline - Turner & Townsend

This makes building skyscrapers in London considerably more expensive due to inflation from global events, regulatory changes, product enhancements, and post-Brexit trading conditions.

Despite these challenges, demand for high-quality, sustainable spaces remains strong, and investor confidence is slowly returning. This allows some investors to take a long-term view, aiming for favourable letting markets. The report suggests that successful skyscraper development in London is still possible, provided project teams address viability concerns early on.

A key finding is that a skyscraper's shape is as crucial as its height in determining overall cost, with a potential 25% price difference between ambitious and cost-efficient designs in London.

London has experienced four distinct waves of high-rise construction over three decades, driven by varying typologies. The city is now entering its fifth wave, characterised by a strong focus on value, delivering high-quality towers despite economic difficulties:

Early towers like Salesforce Tower and The Shard established the architectural role of height in London's skyline.

Subsequent developments, such as 22 Bishopsgate, prioritised efficient building forms to enhance amenities for occupiers.

Buildings like The Dovetail Building focus on reducing carbon emissions and improving user well-being.

Newer towers, like 99 Bishopsgate, are increasing amenities and blurring public/private boundaries with community spaces and viewing galleries.

Steve Watts, head of Tall Buildings at Turner & Townsend, said: “Demand for tall buildings globally remains incredibly strong, although the latter in London has suffered a difficult period. With elevated construction costs further pressured by continuing inflation, as well as unfriendly financing conditions and softened yields, viability is now the most pressing issue, and doing “more with less” is the order of the day in a lot of markets, particularly London.”