Is a friend's offer to build an upper floor on a house, on the condition that he lives in it and leaves it upon recovering the cost of construction without any increase, considered usury (riba)?

You permitted your friend to build on your property through an absolute, timeless loan (i'ara). What you both agreed upon regarding the payment for the building in the described manner is invalid due to the clear uncertainty (jahalah) and ambiguity (gharar (definition)) involved. The preponderant opinion regarding an absolute loan of real estate is that the lender (mu'ir) may reclaim it whenever he wishes, provided he pays the borrower (musta'ir) the value of the building as it stands, not as dismantled. This is the view held by the Shafi'is and Hanbalis.