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96
EC World Real Estate Investment Trust ANNUAL REPORT 2016
NOTES TO THE
Financial Statements
For the Financial Year ended 31 December 2016
14. Investment properties (continued)
Fair value hierarchy
Fair value measurements using
Quoted prices in
active markets for
identical assets
Significant other
observable inputs
Significant
unobservable
inputs
(Level 1)
(Level 2)
(Level 3)
S$’000
S$’000
S$’000
31 December 2016
– Investment Properties
–
–
1,333,297
31 December 2015
– Investment Properties
–
–
1,383,809
There were no changes in valuation techniques during the year.
Valuation techniques and key unobservable inputs
The following table presents the valuation techniques and key inputs that were used to determine the fair value
of the investment properties classified under Level 3 of the fair value hierarchy:
Description
Valuation
techniques
Key
unobservable
inputs
Range of
unobservable
inputs
Relationship of
unobservable inputs to
fair value
Investment
properties
Discounted cash
flow
Terminal
Capitalisation rate
6.0% – 6.5%
(2015: 6.0% – 6.5%)
The higher the terminal
capitalisation rate, the
lower the valuation.
Discount rate
8.0% – 9.0%
(2015: 8.0% – 9.0%)
The higher the discount
rate, the lower the
valuaton.
Valuation processes of the Group
The Group engages external, independent and qualified valuers to determine the fair value of the Group’s
properties at the end of the financial year based on the properties’ highest and best use. As at 31 December 2016,
the fair values of the properties have been determined by Colliers International (Hong Kong) Limited. The fair
values of the properties as at 31 December 2015 were based on the average of the two independent valuations
undertaken for each property by the independent valuers (Colliers International (Hong Kong) Limited and Savills
Valuation and Professional Services Limited) for listing purposes.
The IPO portfolio or the IPO Properties includes Chongxian Port Investment, Chongxian Port Logistics (Complex
1 and Complex 2), Fu Zhuo Industrial, Fu Heng Warehouse (Building 1 and Building 2), Hengde Logistics (Phase 1
and Phase 2) and Stage 1 properties of Bei Gang Logistics.