Whether or not you’ve heard of the term “trophy property” before, an educated guess about its meaning will likely land you in the ballpark. Interestingly, trophy property is a relatively new designation. Prior to 2002, there was no definition provided in The Dictionary of Real Estate Appraisal, The Appraisal of Real Estate, Real Estate Investors Deskbook, or Modern Real Estate. That’s the year Greenfield Advisors founder and former President Bill Mundy penned the following in The Appraisal Journal:
“A trophy property is an investment grade property represented by value or price at the top 2.5 percentile of properties in its particular land use category and is distinguished by special high-quality attributes that will attract the financial resources, in cash, to purchase it.”
As the title suggests, trophy properties are those commercial and residential areas featuring a combination of rare amenities such as unparalleled location, unique biodiversity, and optimal views. Of course, the characteristics of unparalleled location are often reversed when considering commercial or residential properties; the former is usually a prime piece of urban real estate (think New York City’s Rockefeller Center), while residential trophy property is typically more remote, often at the cost of easy accessibility (think picturesque parts of the California coastline).
Residential trophy property is often preserved in perpetuity through a conservation easement, enhancing the property’s investment quality. Because of this, residential trophy property became synonymous with swatches of sprawling American ranch acreage, with iconic views ranging from the Tetons to the Rockies. These desirable tracts of land were not only spacious and well-preserved, but also constructed with a delicate footprint, a perfect foundation for modest yet luxurious vacation-style lodges as well as access to recreational activities such as horse stables and elite golf courses.
Trophy property can also be found outside of the United States. One such spot is located on New Zealand’s d’Urville Island, a 5,065-acre property near Wellington featuring 18 miles of riparian coastline and advantageous topography producing miles of spectacular views of the Marlborough Sounds, as seen from one of the two 3,000-square-foot lodges on the property. Greenfield Advisors’ CEO Dr. John Kilpatrick took one of the longest flights on earth to do a site inspection of the d’Urville Island property for a report he and I worked on together. Dr. Kilpatrick’s review of the d’Urville Island property was similar to awe-inspiring experiences I’ve had inspecting trophy lands in untouched corners of Hawaii and California—breathtaking. Then the adjectives start to fall away.
That’s the thing about trophy property: it’s easy to imagine but harder to locate. Once you set foot on one of these properties, it becomes clear why the market sets them at a premium. After you regain your breath, of course.
– Ian Ebright