14. INVESTMENT PROPERTIES Group 2024 2023 S$’000 S$’000 Beginning of the year 805,629 1,076,874 Asset enhancements during the year 1,642 23 Effect of straight lining of step-up rental (313) (2,720) Net change in fair value of investment properties (95,699) (606,750) Disposals during the year – (3) Transfer from disposal group – 392,930 Currency translation differences 2,467 (54,725) End of the year 713,726 805,629 Details of the investment properties are shown in the Investment Properties Portfolio Statement. All investment properties are mortgaged to secure bank borrowings (Note 18). The overall portfolio valuation in RMB terms decreased from RMB4,336,000,000 (equivalent to S$805,629,000) as at 31 December 2023 to RMB3,829,000,000 (equivalent to S$713,726,000) as at 31 December 2024. (a) 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 2024, the fair values of the properties have been determined by Savills Real Estate Valuation (Guangzhou) Ltd – Shanghai Branch (“Savills”) (2023: Knight Frank Petty Ltd (“Knight Frank”)). The independent valuer is of the view that the valuation techniques and key inputs adopted are reflective of the current market conditions based on information available as at 31 December 2024. The Manager has reviewed the appropriateness of the valuation techniques, and assumptions applied by the independent valuers. (b) Valuation techniques and key unobservable inputs Fair values based on valuation reports are measured under Level 3 of the fair value hierarchy which included significant unobservable inputs in the valuation techniques used. The following table presents the valuation techniques and key unobservable 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 Coactualisation rate 5.5% – 6.5% (2023: 5.25% – 6.5%) The higher the terminal capitalisation rate, the lower the valuation. Discount rate 8.0% – 9.0% (2023: 7.75% – 9.0%) The higher the discount rate, the lower the valuation. (c) Other significant valuation assumptions The fair values of CXPI, CXPL, FZDS nd FHCC, which totalled RMB2,393,000,000 (S$446,055,000) are subject to assumptions regarding the outcome of the Master Offset Agreement including the termination of master leases and related party leases with the Sponsor Group. The negotiations of the Master Offset Agreement with the Sponsor Group is still ongoing. ANNUAL REPORT 2024 99 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024
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