The cost of constructing tall buildings is rising sharply across global markets, putting pressure on developers and raising concerns about the long-term feasibility of high-rise projects, according to a new report by Turner & Townsend.
.jpg)
The firm’s Tall Buildings Construction Guide 2026 highlights how a combination of inflation, labor shortages, supply chain disruptions, and increasingly complex building requirements is driving up costs at a faster rate than in other construction segments.
The report, which analyzed six major cities, found that tall buildings face disproportionately higher cost increases compared to mid-rise developments. Their structural complexity, reliance on specialized labor, and stricter safety and sustainability requirements are key contributors to this trend.
In London, the cost of constructing a new office tower has surged by 40% since 2020. Similar patterns are evident across global markets: costs have climbed 30% in Seoul, 50% in Tokyo, and 35% in Dubai for residential towers.
“Rising costs are reshaping the feasibility of tall buildings,” the report said, noting that developers are increasingly forced to rethink building height, design strategies, and delivery methods to remain financially viable.
Several factors are compounding cost pressures:
Despite these headwinds, demand for tall buildings remains strong in dense urban centers, where land scarcity and population growth continue to drive vertical development.
However, developers are adapting. The report notes a growing shift toward alternative construction approaches, including modular techniques, hybrid structural systems, and design optimization strategies aimed at improving efficiency and controlling costs.
Steve Watts, head of tall buildings at the firm, said:
“Demand for tall buildings globally remains incredibly strong, with each location developing its tower products in different ways. Yet elevated construction costs, continuing inflation and risks, unfriendly financing conditions and softened yields have made viability the most pressing issue. Doing ‘more with less’ is therefore the order of the day in major markets like London, New York, and Tokyo.”
He added:
“Now more than ever, it is important to recognise the fundamental cost drivers at the start of a project so investment can be directed to areas of true value.”
.jpg)
The sharp rise in high-rise construction costs is likely to have lasting implications for urban development. In some markets, projects may be scaled back, delayed, or redesigned to reduce height and complexity. In others, developers may shift focus toward mid-rise or mixed-use developments that offer better cost efficiency.
Financing is also becoming a critical challenge. Higher construction costs combined with rising interest rates and softer returns are tightening margins, making lenders more cautious and forcing developers to demonstrate stronger project fundamentals.
At the same time, sustainability expectations are reshaping how towers are built. While these requirements add upfront costs, they may deliver long-term operational savings and help projects meet regulatory and investor expectations tied to environmental performance.
Looking ahead, the report suggests that while the outlook for tall buildings remains positive, the next generation of high-rise projects will likely be defined by smarter design, greater efficiency, and a sharper focus on value-driven construction.
Originally reported by Andy Brown, Head of Content, Construction and Engagement in Construction Briefing.
