$ / Sq.Ft.

Construction Budgeting


Luxury Home Construction Cost and Why It is Shocking to Some
For those who think they can make millions building custom luxury homes and selling them quickly, they can perish the thought.  One can build cheaply, shoddily and without style to make a profit, but not if any thought is put into the design and crafting of the projects.  Property value simply does not rise that fast.  One has to have the resources to hold on for at least ten years for truly custom luxury properties to make money for them.  As to how to spot the right locations - read Handiman's Special.

Case in point, take Robert Adam and his three brothers - Robert Adam, being the premier interior designer and stylist in 18th century England, after returning from Italy to London, joint-ventured with his brothers to take on a speculative but upscale development project called the Adelphi (Greek meaning brothers).  Due to the collapse of the financial markets and political upheaval at the time, the company went bankrupt after three of the brothers (including Robert) died.  So my advise is : don't attempt to build the Adelphi or Regent's Park to make a quick buck, unless, of course, you have ready-made clientele waiting to buy your products.  Rendering of the Adelphi project in London circa 1768 - 1772 is shown in the image at the top of the page.

Luxury home construction cost ranges between $500 to $1,000 per square foot to build.  At the top end, costs in the States and Canada do not vary that much.  In some states where material and labor are cheaper, mass-production builders are building at very low cost (as low as $80 per square foot for mass production homes).  For those who claim they can build custom luxury homes at anything below $500 a square foot either do not understand what true luxury is or choose to let marketing and promotion take over common sense.

We had so many inquiries about construction cost, mostly from people who wanted to make a quick million or two, that we feel compelled to consult the published construction cost data from the U.S. and Canada, so that once and for all, the questions are answered. You can always go on line yourself and check out the facts we are presenting here.

From the U.S. 2015 National Building Cost Manual, compiled for home builders who build to sell to make a profit, a Class 1 (top class) house with 'four building masses' (see drawing below also taken from the National Building Cost Manual), the construction cost is $354.83 to $406.35 per square foot plus 9 to 10% more if the exterior material is masonry.   This is still considered 'spec-quality' albeit at the top end of that class.   In the U.S., custom built luxury homes can be built with budgets that boggle the mind of us mortals, at US$1,000 per square foot and up.  The Canadian counterpart of the U.S. Building Cost Manual which actually included a custom-build category of houses in Toronto and Vancouver.  The Luxury Home Construction Cost ranges from $400 to $1,000 per square foot.

Toronto Custom Designed House

Toronto Luxury Home Construction

Toronto Custom Designed House


Since one cannot change the current norm of the luxury home construction cost, land cost, however, may be lowered.

Precious land in urban centers suitable for building houses are hard to come by.  Usually it comes with a house attached.   Since building luxury homes is fun but not a quick money-making scheme, at the opposite end of the spectrum is to buy a piece of land in a desirable neighborhood and apply to the city to subdivide it into several pieces.  You only have to hold on to it for ten years and you can quit your day job, provided the city you live in is not becoming a ghost town or part of the rust-belt.  If you still want a house, build on one of the lots and keep the rest for the next ten years.  Again, you have to know where to buy and what to build.  We can certainly offer our services to you in those aspects.


When you have finally bought a house or a piece of land, apply to the municipality for the biggest and tallest house that they will allow on the land.  Never build to zoning limits.  If you do, you will not be able to realize the maximum value of your house after ten years.  Build or add with maximum square footage on the main floor.  Include a good size living room, family room, kitchen, dining room and library - all on the same level.  You can never have enough space on the main floor.  Also add some space to the second floor if it is inadequate, but never ever apply to the city for more space in the attic.  Attic space, like swimming pools are not worth much when you sell.  The diagram on the left shows the additions (highlighted in yellow) to an existing house.  Much of the added volume of space is on the ground level.  Other things to add, as your real-estate agent will tell you, are : garages, large space for home-theatre, circular driveway that is heated, etc.  For larger homes, a circular driveway is a must, especially if the street is busy with traffic at certain hours.


One caveat to the above is that applying to the city for any variation or change is never a cut and dry matter.  Most of the time the neighbors are involved in the decision-making process and that's when things can get ugly (see linked article in Emperor's New Clothes section (http://pokudesign.com/Section/emperors/) .  Hire a professional planner who knows the workings of city hall inside out and a good municipal lawyer whose mere presence will give city officials something to think about.  Know the limits and propose something that people will appreciate, although good designs are seldom recognized by neighbors but city officials certainly can recognize them.  The first round is at the city government level.  If you are rejected at this level, review your plans and map out new strategies to take the fight to a higher level.  Ringing door bells and offering neighbors brownies is not such a good approach, especially in neighborhoods where you are not the only one asking for perceived potential windfalls.  But a sensible business-like meeting face to face with them sometimes work miracles, unless of course, if the neighbor is totally psycho.


Another contentious issue is how much should you pay for material and labor?  If you pay a builder a guaranteed price for building you a house, doesn't matter how accurately or meticulously the contract documents are drawn up, you can never be sure you are getting what you are paying for.  In the top-end custom-build business, nearly all customers are using the Construction Management method of getting a house built.  The gist of the system is you hire a company like ours, Po Ku Design Build, to 'manage' the construction of your house.  We actually build the whole house for you, that means you don't have to hire a crane yourself, we'll have that arranged for you.  But, instead of promising you a guaranteed price, we establish a detailed budget in the very beginning based on a set of requirements from you and the drawings and specifications prepared by us.  This budget we will adhere to.  Along the way, if things need changing, the budget will be revised.  You the customer, get a printout of the spreadsheet once a month.  The spreadsheet (segment of which you can view on the right) contains columns of figures : category, items within the category, original budget for that category, money already spend, expected final budget for the category.  There are roughly 55  categories in the spreadsheet that makes up the total luxury home construction cost.  The cost of each category can be compared and verified by the customer.  he columns are tallied continuously and the sums are shown on the bottom of the spreadsheet.  The process is transparent and flexible.  As long as the preparations and work have not started yet, changes can be made.  However, if preparatory work has already been done, then that work may have to be scrapped but the cost still needs to be paid.   If the customer wants to see a mock up beforehand, it can be done at cost.

Interior Design Canada

glen road house front elevation - best example of luxury homes canada

Next Project

See More