Having gained profound insights into Toronto's real estate scene, I have observed the swift expansion in population and real estate projects, especially in the pre-construction phase. As Toronto grows, condo developments have become a significant aspect of the city's skyline.
Building a condo is far from straightforward; it’s a process filled with hidden expenses that impact budgets, timelines, and ultimately the price paid by the future homeowner.
Whether you’re an investor or a prospective buyer, understanding these costs is key.
Here, we’ll explore the multifaceted expenses involved in building a condo in Toronto, breaking down land acquisition, construction, and additional costs that affect project profitability and pricing.
Ready to dive in?
Quick Summary
- Building a Toronto condo requires expenses far beyond initial construction, including land acquisition, labor, and numerous soft costs.
- Land in prime Toronto locations is highly competitive, driving up acquisition costs and reducing profit margins for developers.
- Architects and contractors typically charge between 10-17% of the project budget for planning, construction, and oversight.
- Despite high costs, investing in a Toronto condo can offer a good return due to the city’s growing demand, high quality of living, and reduced commute times.
What Is The Developer’s Profit Margin?
Condo developers in Toronto often work with profit margins between 12-20% after all expenses are accounted for. With rising land costs, taxes, and building requirements, these figures might seem surprisingly low.
Why? It starts with land acquisition. Developers need prime locations to make condos attractive to buyers, but prime land comes at a high price.
For every square foot of land in Downtown Toronto, developers pay up to $300, and that’s just the beginning. When we factor in building specs, luxury finishes, and high-demand amenities, profit margins narrow quickly.
And remember, unexpected delays or project hiccups can tighten those margins further.
How Much Does It Cost To Build A Condominium?
A standard condo unit with high-quality materials, branded appliances, and turnkey finishes costs developers between $102,000 and $240,000 per unit, on average. Here’s a breakdown of typical per-hour costs for various trades involved:
- Carpenters, excavators, and masons: $70 per hour
- Electricians: $65 - $85 per hour
- Painters: $20 - $35 per hour
- Plumbers: $45 - $65 per hour
When all elements are combined – land, hard costs, and interiors – the average construction cost per square foot of a condo in Toronto comes in between $85 and $200. Building a two-floor, single-unit property might total $484,500 once everything is completed, with labor and materials alone costing around $238,200 [1].
Breakdown Of Costs
Land Costs
Toronto’s skyrocketing land prices are a significant factor in condo cost. Take Downtown Toronto as an example:
- Downtown Toronto: $300 per square foot
- Greater Toronto Area (GTA) Suburbs: $200 per square foot
Because of limited land availability, developers are often forced to outbid each other for prime locations, leading to escalating prices. These prices also reflect the fact that in Toronto, unlike other cities, building sites are calculated based on buildable square footage, meaning each floor costs around $200, which could double for sought-after areas.
| Area Code | Average Land Price (per Buildable Sq.Ft) | Notes |
|---|---|---|
| 416 (Downtown Toronto) | $123 (Q1 2023) | Prices rebounded from $100 in Q4 2022. |
| 905 (Suburban Areas) | $49 (Q1 2023) | Down 29% annually; significantly lower than urban areas. |
| Old Toronto | $143 (Q1 2023) | Average price has varied; high demand areas can reach up to $195. |
| North York | $123 (Q1 2023) | Represents a 17% increase over the average from 2018-2023. |
| Mississauga | $56 (2018-2023 average) | Prices have fluctuated between $37 and $81 during this period. |
Hard Costs
The term “hard costs” refers to expenses directly tied to the building’s construction. These costs vary based on building height and quality:
| Building Type | Cost per Square Foot (GTA) |
|---|---|
| Hybrid (up to 6 stories) | $195 - $265 |
| Mid-rise (up to 12 stories) | $215 - $280 |
| High-rise (13-39 stories) | $215 - $290 |
| Luxury high-rise (40+ stories) | $275 - $330 |
With most Toronto developments exceeding 40 stories, the high-rise pricing (around $330 per square foot) quickly adds up. This is before factoring in premium finishes or amenities typical of Yorkville or King West developments.
Most construction buildings in Toronto, especially in the Downtown area, are over 40 storeys. So, how is the cost of condos in the Downtown area for pre-construction condos over $1,000 per square foot? When it simply comes to hard costs, the prices are going over $330 per square foot, and the cost of premium quality is extra.
Premium-quality condos are those being constructed in Yorkville or King West. Moreover, the finishes of these buildings in Downtown may vary a lot as compared to those in Calgary structures. (Check the list of the most recent condo developments in Calgary Alberta).
Soft Costs
Soft costs are often underestimated but can significantly impact the budget. These include fees related to:
- Sales and marketing
- Real estate commissions
- Architectural and zoning
- Legal and permitting
One major soft cost in Toronto is the development fee, which can be around $17,644 per one-bedroom unit [2]. Here’s how other fees add up:
- Education Development Charges: $1,500 per unit
- Parkland Fees: 5-10% of the site value
- Permitting Fees: Variable
In total, soft costs can add up to $150 per square foot for an average Toronto condo.
Role-Based Cost Breakdown
Toronto architects and contractors typically charge 10-17% of the total project budget. Here’s how each role contributes to the project:
- Architect: Designs, drafts floor plans, finalizes construction documents, oversees design details.
- Contractor: Sources materials, manages subcontractors, handles permits, and cleans up post-construction.
An architect’s role earns them $48,500 - $82,400 for a typical project, while contractors may charge $66,600 or more for their work alone.
Total Cost Estimate
Here’s a comprehensive look at the average costs involved in building a Toronto condo per square foot:
| Cost Type | Average Cost (per square foot) |
|---|---|
| Land Cost | $200 - $300 |
| Hard Cost | $330 |
| Soft Cost | $150 |
| Total | $680 - $780 |
For prime developments with luxury features, these numbers can go as high as $850 per square foot.
Balancing Budgets and Expectations
Despite the high costs, condo developments in Toronto deliver excellent living standards, especially for urban dwellers seeking convenience. The cost of building reflects the quality, location, and added amenities in Toronto's real estate scene. Here’s why a Toronto condo remains a worthwhile investment:
- Central Living with Reduced Commute Times: Many condos are situated near major hubs, providing access to jobs and amenities.
- High-Quality Builds with Premium Features: Developers are incentivized to create unique designs and amenities that elevate Toronto’s skyline.
For anybody looking to buy a pre-construction development in Toronto, now is a great time to buy. However, for those looking for an affordable development, it might be a struggle to find a condo within a low budget. See Precondo for exclusive access to all the best new condos in Canada.
References:
- https://www.international.gc.ca/protocol-protocole/policies-politiques/property-guide_lignes-directrices-immobiliers.aspx?lang=eng
- https://www.toronto.ca/city-government/budget-finances/city-finance/development-charges/
