Tropicana Corporation Berhad Annual Report 2019

17. INVESTMENT PROPERTIES (CONT’D.) Description of valuation techniques used and key inputs to valuation on investment properties: Valuation techniques Significant unobservable inputs Range Commercial building Investment method** Estimated rental value per sqft per month RM1.00 to RM6.00 Expected market rental growth – Long-term vacancy rate 5% to 10% Yield rate 3.75% to 8.0% Commercial building Cost method Buildings are valued by reference to the current RM20 per sq ft to estimates on construction costs to erect equivalent RM230 per sq ft buildings, taking into consideration of similar accommodation in terms of size, construction, finishes, contractors’ overheads, fees and profits. Appropriate adjustments are then made for the factors of obsolescence and existing physical condition of the building. Construction in-progress Income approach by This approach is based on residual value of property residual method after deduction of full cost of development and profit from sales proceed of completed development and discounted at an appropriate rate to reflect the inherent risk and holding cost for the period of development to arrive at the current market value. Estimated rental value per sqft per month RM4.80 Development period 0.75 year Long-term vacancy rate 5% Yield rate 8% Land Comparison method The comparison method entails analysing recent -50% to 30% transactions and asking prices of similar property in and around the locality for comparison purposes with adjustments made for differences in location, visibility, size and tenure. ** The investment method entails determining the net annual income by deducting the annual outgoings from the gross annual income and capitalising the net income by a suitable rate of return consistent with the type and quality of the investment to arrive at the market value of the subject property. For the financial year ended 31 December 2019 Notes to the Financial Statements Tropicana Corporation Berhad Annual Report 2019 pg 176 About Tropicana Our Strategic Performance Our Leadership