DENSITY
The enduring value of tall development
Tall buildings – whether commercial, residential or mixed-use – are an appealing and efficient way to bring footfall back into city centres. At a time when the ‘online-first’ era has impacted high streets and traditional economic hubs, an injection of high-density development can deliver investment at scale.
Tall residential buildings offer high-quality solutions to mass housing and are a key part of bringing more people within easy walkable distance of amenities, transport infrastructure, and green spaces.
Mixed-use buildings are more flexible and resilient to changing economic conditions – with a blend of housing, hotel, office, retail and cultural space offering diversification – but fundamentally also bring all those offerings to a single, accessible location.
Such towers may be new or renewed, particularly in cities with high volumes of aging stock, where feasibility studies can be used to assess the relative benefits of refurbishment versus reinvention versus redevelopment.
More than economic tools – tall buildings are often landmarks that add prestige and value to areas. They concentrate more usable space on a finite land resource, provide a quality infrastructure for occupiers, perhaps in a prominent address with an iconic design.
It is worth acknowledging that not all tall projects are successful – at least not in their first iteration – and they can be prominent reminders of what is at stake. The higher you go, the more elevated both the risks and rewards become.
All this makes it essential to use experienced teams with the right skills to work together at the outset to set up the project for success.
STANDARDS
Quality and safety are non-negotiable
Despite the attention being placed on value and viability – what is clear across the leading global markets for tall buildings is that clients will not sacrifice quality or safety.
Part of this is due to the increasingly competitive global market for Grade A commercial and premium residential high-rise space, where supply trails demand in many established hubs.
The increasingly trans-national market for tall buildings, including growing attention on safety (both in construction and operation), also means that we are seeing greater and more globally consistent regulation being implemented across key geographies.
In London, the UK’s Building Safety Act is a prominent example, but from Mumbai to Seoul, new development controls, environmental requirements, and fire safety measures are raising the bar for tall buildings.
In construction, this impacts cost and schedule with earlier/more design and construction planning steps required to be approved at different gateways.
“Across leading global markets, clients are unwilling to compromise on quality or safety in tall building development. Competition for Grade A commercial and premium residential space means projects must meet the highest standards to remain attractive to investors and occupiers."
ECONOMICS
Changing pricing dynamics
Costs have risen sharply over the past five years in all the spotlight cities tracked in this report. We explore the factors driving this in the city deep dives.
The cost to deliver higher quality and safety must be considered when approaching projects. To ensure viability, smart up-front design decisions that factor in procurement strategy, and an efficient and streamlined construction phase, become essential.
The cost ranges for constructing tall office and residential shell and core buildings vary significantly across global markets. In dollar terms, Mumbai is the least expensive spotlight location studied, while New York is the most costly, with London only slightly below it.
Most of the variation between countries can be attributed to market differences in construction costs, such as labour, materials, logistics, and tendering conditions.
Planning frameworks often have a strong bearing, with resulting impact on building efficiency. For example, a tall building in London may need to accommodate a constrained site and strict height or massing limitations, whereas a comparable tower in Dubai is less likely to face the same planning restrictions, allowing for more efficient and cost effective design solutions.
Tall buildings construction is, however, both global and local. The cost pressures brought by market factors can often be mitigated through global knowledge of tall economics, latest innovations and how to make smart design, structural and strategic decisions.
Basis of dataset
Note: above ranges are for buildings 20-60 floors (anonymised to respect confidentiality). The cost ranges presented are based on the following number of project data points:
- London – 25 projects
- New York – 10 projects
- Seoul – 11 projects
- Tokyo – 7 projects
- Mumbai – 13 projects
- Dubai – 30 projects
FX rates used:
- $1 : £0.75
- $1: 1,480 ₩
- $1 : 158.18 JYP
- $1 : 92.13 INR
- $1 : 3.67AED
Scope: these costs represent shell & core costs at current day including construction inflation but excluding CAT A, demolition, external works and utilities.
CERTAINTY
Mitigating the height premium
“The relationship between cost and height is complex, particularly as buildings rise beyond 20 storeys and into supertall territory. Careful design decisions and early cost planning are essential to manage risk and give investors confidence.”
At a time when investment returns are under heavy scrutiny, and global geopolitical instability is encouraging investors to prioritise security, it’s important to show that tall buildings can deliver for those who back them.
The relationship between cost and height is not straightforward, but typically tipping over the 20-storey mark brings a new set of implications, and even more so when buildings reach supertall (>300m)/mega-tall (>600m) proportions. The nature of these impacts will vary based on design.
Schedule also has big part to play in cost planning. Large projects take longer to construct – and in the meantime fluctuating economic conditions or local contexts might change demand patterns. Time is a multiplier for cost and uncertainty. Early focus on the design concept and the ‘why, what and how’ of the project is essential.
Creating certainty is in part about the nature of the building design and vision. Diversified, flexible schemes that will allow for changing use over time will help reduce risk.
However, regardless of use class, it is also vital to understand and control costs on the project to give investors clarity in advance and confidence throughout a project. Cost control should commence once the brief is refined and agreed, alongside a detailed cost plan.
COMMERCIALITY
Understanding the commercial impact of height
Our data shows that there are inherent cost premiums that come with increasing height but, critically, that these premiums can be minimised if the concept design is optimised.
Taller buildings take longer and cost more to build because of a range of factors:
Height tends to bring slenderness which means a greater wall:floor ratio
Increased wind and gravity loads require larger cores and heavier structural frames
Efficiently serving occupiers over more floors requires more lifts with larger capacities and higher speeds
Plant capacities increase, with more MEP distribution systems coping with greater hydraulic pressures
These structural and MEP factors inherently make tall buildings less efficient in terms of net:gross floor area ratios. Proportionally, there is less lettable or saleable space relative to the overall footprint
Enhanced quality of design and materials to match the scrutiny placed on high-profile projects
Expectations of public utilities – such as viewing galleries, community uses, and generous ground floors
The unique scale and requirements limit the pool of potential contractors – and the supply chain expect compensation for additional risks associated with height and complexity
Simple construction logistics demands more plant, people and resources, such as tower cranes and hoists
Longer construction programmes inherently have greater risk from time-related costs, inflation, and unexpected economic shocks
SCALE
Unlocking economies of scale
Experienced teams hold strategies to reduce the impact of every single one of these factors.
Success starts through careful understanding and response to these drivers, starting the concept stage and with consistent honing of details through the design and construction phases. By doing this, clients can maximise the economies of scale that come with tall buildings, and the cost premium can be mitigated or even eliminated.
Contents
Follow us
