Tropicana Corporation Berhad Annual Report 2020

17. INVESTMENT PROPERTIES (CONT'D.) The Group has no restrictions on the realisability of its investment properties and no contractual obligations to either purchase, construct or develop investment properties or for repairs, maintenance and enhancements. Investment properties are stated at fair value, which had been determined based on valuations as at 31 December 2020 and 31 December 2019 performed by accredited independent valuers who are specialists in valuing these types of investment properties. The fair value of the properties had been determined using the cost method, comparison method, income approach by residual method and investment method depending on the nature of the properties. Included in the construction in-progress amounting to RM90,144,000 (2019: RM81,964,000) is stated at cost as management believes that the fair value cannot be reliably determined due to the nature and the amount of remaining project risks. Fair value hierarchy disclosures for investment properties is disclosed in Note 39. Reconciliation of fair values: Freehold Leasehold land and land and buildings buildings CIP Total RM'000 RM'000 RM'000 RM'000 At 1 January 2020 148,733 1,088,465 57,872 1,295,070 Additions 15,077 18,403 28,954 62,434 Re-measurement recognised in profit or loss 57,217 66,373 14,538 138,128 Reclassification – 81,373 (81,373) – Transfer from property development costs – – 5,598 5,598 Transfer to property, plant and equipment (Note 15) – (11,326) – (11,326) Transfer from land held for property development (Note 16(a)) 34,433 – – 34,433 At 31 December 2020 255,460 1,243,288 25,589 1,524,337 At 1 January 2019 178,733 314,436 – 493,169 Additions – 346,581 53,952 400,533 Re-measurement recognised in profit or loss – (871) 197 (674) Transfer from property development costs (Note 16(b)) – 522,019 3,723 525,742 Transfer to assets classified as held for sale (Note 27) (30,000) (45,700) – (75,700) Disposals – (48,000) – (48,000) At 31 December 2019 148,733 1,088,465 57,872 1,295,070 17. INVESTMENT PROPERTIES (CONT'D.) Description of valuation techniques used and key inputs to valuation on investment properties: Valuation techniques Significant unobservable inputs Range 2020 2019 Commercial building Investment method** Estimated rental value RM1.00 to RM1.00 to per sqft per month RM6.00 RM6.00 Long-term vacancy rate 5% to 10% 5% to 10% Yield rate 3.75% to 3.75% to 8% 8% Commercial building Cost method Buildings are valued by reference to the current estimates on construction costs to erect equivalent buildings, taking into consideration 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. Estimated construction cots per sqft RM18 to RM20 to RM235 RM230 Construction in-progress Income approach by This approach is based on residual value of residual method property after deduction of full cost of development and profit from sales proceeds of completed developments 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 -30% -50% recent transactions and asking prices of to 30% to 30% 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. NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2020 ANNUAL REPORT 2020 TROPICANA CORPORATION BERHAD FINANCIAL STATEMENTS AND OTHER INFORMATION 220 221