Positioning for the Future | 139
Appendix
Notes to the Financial Statements
Year ended 31 December 2014
5
INVESTMENT PROPERTIES
The Group
Note
2014
$’000
2013
$’000
Restated
At 1 January, as restated
15,495,934 17,882,069
Acquisition of subsidiaries
31(b)
363,514
746,708
Disposal of subsidiaries
31(d)
–
(3,376,949)
Additions
1,061,907
829,622
Disposals
(89,175)
(276,620)
Reclassimcation from/(to) development properties for sale
232,070
(453,211)
Reclassimcation to asset held for sale
–
(86,471)
Reclassimcation (to)/from property, plant and equipment
(232,475)
125,855
Changes in fair value
451,095
461,458
^
Translation differences
(133,672)
(356,527)
At 31 December
17,149,198 15,495,934
^
Included $16.3 million relating to a discontinued operation.
(a) Investment properties, which include those in the course of development are stated at fair value based
on independent professional valuations or internal valuations. The fair values are based on open market
values, being the estimated amount for which a property could be exchanged on the date of the valuation
between a willing buyer and a willing seller in an arm’s length transaction wherein the parties had each
acted knowledgeably and without compulsion. In determining the fair value, the valuers have used valuation
techniques which involve certain estimates. The key assumptions used to determine the fair value of investment
properties include market-corroborated capitalisation yield, terminal yield and discount rate. In relying on
the valuation reports, management has exercised its judgement and is satismed that the valuation methods
and estimates are renective of current market conditions.
The valuers have considered valuation techniques including the direct comparison method, capitalisation
approach, discounted cash nows and residual method in arriving at the open market value as at the balance
sheet date. The direct comparison method involves the analysis of comparable sales of similar properties
and adjusting the sale prices to that renective of the investment properties. The capitalisation approach
capitalises an income stream into a present value using revenue multipliers or single-year capitalisation
rates. The discounted cash now method involves the estimation and projection of an income stream over
a period and discounting the income stream with an internal rate of return to arrive at the market value. In
the residual method of valuation, the total gross development costs and developer’s promt are deducted
from the gross development value to arrive at the residual value of land. The gross development value is
the estimated value of the property assuming satisfactory completion of the development as at the date of
valuation. Details of valuation methods and key assumptions used to estimate the fair values of investment
properties are set out in note 34.
(b) As at 31 December 2014, investment properties valued at $1,761.8 million (2013 $2,106.9 million) were
under development.
(c) As at 31 December 2014, certain investment properties with carrying value of approximately $9,021.5 million
(2013 $7,421.2 million) were mortgaged to banks to secure credit facilities (notes 19 and 20) and under
mnance lease arrangements for the Group.
(d) During the mnancial year ended 31 December 2014, interest capitalised as cost of investment properties
amounted to approximately $39.7 million (2013 $53.9 million) (note 27(d)).
