For the financial year ended 31 December 2015
80
HAW PAR CORPORATION LIMITED
11. INVESTMENT PROPERTIES
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Fair value hierarchy
The following table illustrates the fair value measurement hierarchy of the Group’s investment properties:
Fair value measurements using
Quoted
prices in
Significant
Significant
active
observable unobservable
markets
inputs
inputs
Description
(Level 1)
(Level 2)
(Level 3)
Total
$’000
$’000
$’000
$’000
Recurring fair value measurement for:
31 December 2015
Commercial properties
–
–
144,023
144,023
Industrial properties
–
–
66,800
66,800
Total
–
–
210,823
210,823
31 December 2014
Commercial properties
–
–
148,435
148,435
Industrial properties
–
9,514
67,300
76,814
Total
–
9,514
215,735
225,249
Level 2 fair values of the Group’s properties have been generally derived using the investment method cross referenced
with the direct sales comparison approach, where there have been recent transactions of similar properties in similar
locations in an active market. The cross reference revealed no significant variation in valuation. The most significant
input into the direct sales comparison approach is selling price per square metre.
Level 3 fair values of the Group’s properties have been derived using the income capitalisation approach which the
valuers have also cross referenced with that obtained under the sales comparison approach. Sales prices of comparable
properties in close proximity are adjusted for differences in key attributes such as property size, age, tenure, condition of
buildings, availability of car parking facilities, dates of transaction and prevailing market conditions. The most significant
input into the income capitalisation valuation approach is capitalisation rate.
Under Level 3 fair value measurement, the fair value of the investment properties was calculated using a capitalisation
rate ranging from 5.25% to 7% (2014: 5.25% to 7%) for commercial properties and 7% (2014: 7%) for industrial
properties. An increase in capitalisation rate will result in a decrease to the fair value of an investment property.
NOT E S TO T H E F I NAN C I A L S TAT EME N T S
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