Pre-Construction Condo Investing in Canada 2025

Updated March 2025 • 10 min read

Pre-construction condo investing involves buying a unit before the building is completed — often years before you take possession. At its peak (2016–2021), investors in Toronto and Vancouver made significant profits. In 2022–2024, many pre-con investors found themselves in difficult situations as market values fell below their purchase prices. Understanding the full risk profile is essential before buying.

How Pre-Construction Investing Works

You sign a purchase agreement with a developer, put down a deposit (typically spread over the construction period), and take possession when the building is complete — often 3–5 years later. If the market rises during that period, you've effectively leveraged a small deposit into significant gains. If the market falls, your deposit may be tied up in an asset worth less than you paid.

The Deposit Structure

Unlike a regular real estate purchase, pre-con deposits are paid in stages over the construction period. A typical deposit structure in Ontario:

• 5% on signing
• 5% at 90–180 days
• 5% at 365 days (or when the project hits certain milestones)
• 5% on occupancy / closing

Total: 20% deposit paid over 3–5 years. These deposits are held in trust under the Condominium Act in Ontario, protecting buyers if the developer doesn't complete the project.

Occupancy Fees: An Often-Missed Cost

Occupancy fees cover: interest on the unpaid balance, property taxes, and projected maintenance fees. Budget for 3–18 months of occupancy fees depending on the project timeline.

Assignment Sales

An assignment is when you sell your purchase agreement to another buyer before the building is registered. You transfer your rights as the original purchaser. Many investors plan to "assign" before taking possession rather than closing on the property.

Key points about assignments:

• Developers often restrict or charge fees for assignments ($5,000–$15,000 assignment fees are common)
• Not all developers allow assignments — check your purchase agreement
• Assignment profits may be taxable as business income (the CRA has been aggressive here)
• HST may apply to assignment sales — complex rules apply
• Assignment market has been thin in 2023–2024 as values dropped below purchase prices

HST on New Condos

Risks in Pre-Construction Investing in 2025

• Market timing risk: 3–5 year wait means exposure to market cycles. Many 2021 buyers are closing at 2025 prices — often lower than their purchase price.
• Project cancellation: Developers can cancel projects. Your deposit is returned but you've lost years of opportunity cost.
• Delays: Construction delays are common. Occupancy dates routinely slip 12–24 months.
• Financing risk: You lock in a price today but must qualify for a mortgage at closing (3–5 years from now) based on rates and income at that time.
• Condo fees and special assessments: Initial condo fee estimates are almost always lower than what you'll actually pay.

Evaluating Pre-Construction Deals

• Research the developer's track record — completed projects, on-time delivery, build quality
• Compare price per square foot to comparable resale condos
• Evaluate the location for long-term rental demand and appreciation
• Read the purchase agreement carefully — particularly cooling-off period rights, assignment clauses, and delay provisions
• Get a real estate lawyer to review before signing

The 10-Day Cooling Off Period

In Ontario, buyers of new condominiums have a 10-day cooling off period after signing the agreement of purchase and sale. During this time, you can cancel the agreement for any reason and receive your deposit back in full. Use this window to have a lawyer review the agreement and do your due diligence on the developer and market.