Purpose-Built Rentals vs Presale Condos

Purpose-Built Rentals vs Presale Condos in the Central Okanagan

2025–2030 Outlook (Kelowna • West Kelowna • Lake Country • Peachland)

Big idea: From 2025 to 2030, purpose-built rentals have the policy tailwind (government incentives + financing preference), while presale condos have the sales headwind (harder presales + buyer fatigue). That doesn’t mean condos “die.” It means the mix changes, and each product wins in different conditions.

What’s pushing developers toward purpose-built rentals?

1) The GST rebate is stronger for rentals than condos

Canada now offers a 100% GST (or federal HST portion) rebate for qualifying purpose-built rental housing, and it does not apply to condominium units. 
Translation: It’s simply cheaper (after incentives) to build rentals than condos in many pro formas.

2) Developers are shifting because presales are harder

CMHC says some condo-focused developers are pivoting to rentals because presale requirements have become a major challenge. 
Translation: If buyers won’t pre-buy units early, condos can’t get financed as easily.

3) Rental supply is rising, and it’s starting to cool rent growth

CMHC reports Canada’s purpose-built vacancy rate rose to 3.1% in 2025 (up from 2.2% in 2024). Canada Mortgage and Housing Corporation+1
Translation: More rental buildings are hitting the market, so landlords can’t raise rents forever.

What’s pushing (some) sites back toward condos?

Condos still “work” when end-users return

Condos do best when:

• rates are lower,

• buyers feel confident,

• and end-users (not flippers) show up.

Also: condos can still be the best fit in prime walkable nodes where ownership demand is strongest (downtown, waterfront-adjacent, UBCO area, etc.). (This is a market inference; not a guarantee.)

Central Okanagan twist: small-scale multi-unit housing changes the land game

BC’s Bill 44 forced cities to update zoning to allow small-scale multi-unit housing in many single-family areas. Government of British Columbia
Translation: Some “development value” moves from big towers to infill lots (duplex/triplex/fourplex), which can:

• reduce the number of “must-buy” condo presales,

• increase competition for entry-level buyers,

• and create more investor choices outside condo towers.

Pros & cons: rentals vs presale condos (simple)

Purpose-Built Rentals (PBR)

Pros

• Strong incentives (GST rebate)

• No need to sell units before building (no presale risk)

• Works well in uncertain markets

Cons

• If vacancy rises, rent growth slows

• Big upfront capital, longer payback

• More political risk (rules can change)

Presale Condos

Pros

• Faster return if presales are strong

• Builds ownership supply (some buyers need this)

• Good product in high-demand nodes

Cons

• Presales are tougher right now

• Buyers worry about delays, fees, and future values

• Investor demand is less reliable (rules, financing, sentiment)

2025–2030 Outlook: 3 realistic scenarios

Scenario A: “Rental-Heavy Pipeline” (Most likely)

Probability: ~55% (moderate confidence)

• Rentals keep winning approvals and financing.

• Condos still launch, but fewer and only in A+ locations.

• Rent growth becomes more “normal” as supply rises.

Scenario B: “Condo Comeback” (Possible)

Probability: ~30% (medium confidence)

• Rates drop enough that end-users return in force.

• Presales become easier again.

• Condo projects re-start—especially mid-priced product.

Scenario C: “Construction Stall” (Watch this risk)

Probability: ~15% (lower confidence, but important)

• Costs stay high, financing tight, buyer confidence weak.

• Both condos and rentals slow.

• Pipeline looks “robust” on paper, but not all gets built (Rennie flags delivery risk). landscape.rennie.com

My “status-quo challenge” take (no hype)

People love to say: “Kelowna is overbuilt.”
A better question is: “Overbuilt for who?”

• If you mean luxury condos at the top end: maybe, in some pockets.

• If you mean right-priced homes for locals: we’re still short.

Also, more rental buildings doesn’t automatically mean “affordable.” It often just means less rent growth, not cheap rent. 

What this means for investors, developers, and buyers

If you’re a developer

• Rentals: great for stability + incentives, but underwrite more conservative rent growth.

• Condos: choose only the best nodes + strongest buyer story.

If you’re an investor

• Look for infill / small-scale multi-unit angles created by Bill 44. Government of British Columbia

• Be cautious assuming “rent always goes up.”

If you’re a buyer

• More rental supply can reduce pressure, but it may not make ownership cheaper. 

• The best time to plan is before you need to move.

3 FAQs 

Is it better to build rentals or condos in Kelowna right now?
For many projects, rentals pencil easier because of incentives and no presale requirement. 

Will more purpose-built rentals lower rent in the Central Okanagan?
More supply usually slows rent increases. It doesn’t always make rent “cheap.”

Are presale condos risky in 2025–2030?
They can be, mainly because presales and financing are harder when buyer confidence is low.

If you’re planning to buy, sell, invest, or build in the Central Okanagan, I’ll help you see the real trade-offs (not the headlines).

Mark Coons — Selling Kelowna Real Estate Group | eXp Realty Kelowna
📧 [email protected] 

 📞 778-744-0872