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Sure it increase the value of the asset, but is it just restoring the building back to what it should be worth if it were newly built today or is it actually adding "new" value? If the former then it is recovering asset value, not increasing it.

Maybe that 2% estimate includes reno and rebuild costs over a long period of time ie. if you own a property for 20+ years you're likely going to have to do some major work over that time, especially if the property wasn't already new to start with.