Positioning for the Future | 211
Appendix
Notes to the Financial Statements
Year ended 31 December 2014
34 FAIR VALUE OF ASSETS AND LIABILITIES
(cont’d)
(d) Level 3 fair value measurements
(cont’d)
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The following table shows the valuation techniques used in measuring signimcant Level 3 fair values,
as well as the signimcant unobservable inputs used.
Type
Valuation
method
Key unobservable inputs
Inter-relationship
between key
unobservable
inputs and fair value
measurement
Shopping
malls, ofmces,
serviced
residences
and integrated
development
properties
located in
Australia,
China, Europe,
Hong Kong,
Indonesia,
Japan,
Malaysia,
Philippines,
Singapore
and Vietnam.
Capitalisation
approach
- Capitalisation rate
3.8% to 13.0% (net
1
);
5.5% to 9.5% (gross
2
)
(2013 3.8% to 10.0% (net
1
);
5.5% to 9.5% (gross
2
))
- Occupancy rate
47.8% to 100%
(2013 52.2% to 100%)
The estimated
fair value varies
inversely against
the capitalisation
rate and increases
with the higher
occupancy rate.
Discounted
cashnow
approach
- Discount rate
4.0% to 15.0%
(2013 4.1% to 15.0%)
- Terminal yield rate
3.0% to 12.0%
(2013 3.3% to 12.0%)
- Occupancy rate
49.2% to 100%
(2013 52.6% to 100%)
The estimated
fair value varies
inversely against
the discount rate
and terminal yield
rate and increases
with the higher
occupancy rate.
Residual value
method
- Gross development value
$405.0 million to $1,269.2 million
(2013 $405.0 million to
$1,352.9 million), estimated cost
to completion of $159.4 million
to $358.4 million (2013
$291.9 million to $397.5 million)
The estimated fair
value increases
with higher gross
development
value and
decreases with
higher cost to
completion.
Direct
comparison
approach
- Comparable price
$1,790 to $6,560 per square meter
(2013 $1,790 per square metre)
The estimated fair
value increases
with higher
comparable price.
Assets held
for sale
3
Direct
comparison
and income
capitalisation
approaches
- Comparable price
$8,656 per square metre
(2013 $8,534 per square metre)
- Capitalisation rate
4.3% (2013 5.0%)
The estimated
fair value varies
inversely against
the capitalisation
rate and increase
with the higher
comparable price.
1
Net yield basis after deducting property and related expenses
2
Gross yield basis before deducting property and related expenses
3
The key unobservable input for one of the assets held for sale is the agreed contractual selling price
The fair value of unquoted equity securities was estimated based on the fair value of the underlying
Japanese commercial investment property of the investee company. The valuation was based on
discounted cash now approach and its signimcant unobservable inputs were consistent with the
information as presented above.
