The Replacement Cost theory suggests that property prices are supported by the cost of construction. As inflation drives up the price of materials and labor it becomes more expensive to build new properties. This means that existing properties bough…
The Replacement Cost theory suggests that property prices are supported by the cost of construction. As inflation drives up the price of materials and labor it becomes more expensive to build new properties. This means that existing properties bought at lower prices become more valuable because they cannot be replicated at the same cost today. Investing in assets priced below their replacement cost offers a strong margin of safety and upside potential.
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