Sasbadi Annual Report 2020

95 ANNUAL REPORT 2020 FINANCIAL STATEMENTS (continued) 4. Investment properties (continued) Investment properties comprise of commercial buildings that are leased to third parties. Each of the lease contains an initial non-cancellable period of 3 years. Subsequent renewals are negotiated with the lessees with an average renewal period of 2 years. No contingent rents are charged. In the previous year, the investment properties of the Group are charged to banks as security for banking facilities granted to the Group (see Note 17). The following are recognised in profit or loss in respect of investment properties: Group 2020 2019 RM’000 RM’000 Rental income 108 118 Direct operating expenses (16) (14) Fair value information Fair value of the investment properties are categorised as follows: Group Level 3 2020 2019 RM’000 RM’000 Commercial buildings 2,680 2,680 Level 3 fair value The following table shows the valuation techniques used in the determination of fair values within level 3, as well as the significant unobservable inputs used in the valuation models. Description of valuation techniques and inputs used Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurements Sales comparison method: Entails recent transactions and asking prices of similar property in and around the locality for comparison purposes with adjustment made for differences in location, physical characteristics, time element, if any and other relevant characteristics to arrive at the market value. Price per square foot (RM138 to RM610) The estimated fair value would increase if the price per square foot is higher.