London’s next wave of skyscrapers is at risk of stalling after build costs surged by up to 40% in five years, leaving developers struggling to make schemes stack up.

A new report from Turner & Townsend warns that viability has become the single biggest barrier to delivering tall buildings in the capital, with rising costs now colliding with weaker yields and tougher funding conditions.

The consultant found London has seen one of the steepest cost increases of any global city, making it more than three times as expensive to build a tower as Seoul.

The viability gap is now feeding directly into development decisions, with schemes increasingly being reworked, delayed or quietly shelved as investors reassess risk.

The report said that more positively, demand for quality, sustainable space remains strong, and confidence is beginning to return, with some large investors using their ability to take a longer-term view to get their towers into a favourable letting market.

But it warns that the era of eye-catching landmark building designs is over.

The cost spike since 2020 has been driven by a mix of global inflation linked to geopolitical disruption, tighter regulation, higher specification demands and ongoing post-Brexit trading pressures.

Turner & Townsend said developers are being forced into a “do more with less” approach, stripping back inefficiencies and pushing design teams to focus on value from day one.

One of the clearest pressure points is building form, with the report highlighting that shape can have as much impact on viability as height.

In London, poorly optimised schemes can cost up to 25% more than efficient designs, meaning early-stage massing decisions are now critical to whether projects proceed.

The report suggests the days of purely statement towers are fading, with commercial discipline now driving design decisions as much as architecture.

London’s skyline has evolved through successive waves of development, from landmark towers such as The Shard through to more efficient commercial models like 22 Bishopsgate and more recent schemes focused on sustainability and public access.

But the market is now entering a new phase where schemes must balance design ambition with hard financial reality.

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.

“Now more than ever, it is important to recognise that shape is as important as height when it comes to delivering a project cost efficiently, and there is an ever-increasing focus on ensuring tall buildings are integrated into the broader cityscape, whether that is by offering public amenities or a greater range of uses on the ground floors.”