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ANNUAL REPORT 2014
28 DETERMINATION OF FAIR VALUES (CONT’D)
Non-financial assets carried at fair value (cont'd)
The following table shows the key unobservable inputs used in the valuation models:
As at 31 Dec 2014 As at 31 Dec 2013
Type
Valuation techniques
Unobservable input
Range
Range
Singapore
Discounted cash flow/
Discount rate
7.75% 7.50% - 8.50%
Capitalisation
Terminal yield
5.75% - 6.75% 5.00% - 6.00%
Capitalisation rate
5.50% - 6.50%
5.50%
New
Discounted cash flow/
Discount rate
10.75%
11.00%
Zealand
Capitalisation
Terminal yield
8.25%
8.25%
Capitalisation rate
8.25%
8.25%
Australia
Discounted cash flow
Discount rate
7.00% - 10.50% 12.50% - 15.00%
Terminal yield
8.50% - 9.00% 9.00% - 11.25%
Maldives
Discounted cash flow/
Discount rate
11.50% - 12.00% 11.56% - 12.21%
Capitalisation
Terminal yield
9.50% - 10.00% 9.50% - 10.00%
Valuation process applied by the Stapled Group
The fair value of investment properties is determined by external, independent property valuers, having the
appropriate recognised professional qualifications and recent experience in the location and category of property
being valued. The valuation company provides the fair value of the Stapled Group’s investment properties annually.
The significant unobservable inputs used in the fair value measurement of investment properties are discount rate,
terminal yield, capitalisation rate. Significant increases in capitalisation rate, discount rate, and terminal yield in
isolation would result in a significantly lower fair value measurement.
Key unobservable inputs
Key unobservable inputs correspond to:
• Discount rate, based on the risk-free rate for 5-year and 10-year bonds issued by the government in the
relevant market, adjusted for a risk premium to reflect the increased risk of investing in the asset class.
• Terminal yield reflects the uncertainty, functional/economic obsolescence and the risk associated with the
investment properties.
• Capitalisation rate correspond to a rate of return on investment properties based on the expected income
that the property will generate.
NOTES TO THE FINANCIAL STATEMENTS
