Buildings in your estate attribute to your strength, how quickly you can produce troops, your hospital capacity, resources produced and more. These buildings play a huge role on how successful you will be in the game. Depending on your strategy, if it is your main castle (not a farm), it is usually a good idea to keep all buildings upgraded to your castle level or one level below. Some lords may however elect to move their castle ahead several levels, especially if they have an abundance of resources, either from plundering other lords or with assistance from members in your alliance.
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