NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2021 18. INVESTMENT PROPERTIES (continued) (d) Fair value hierarchy (continued) The movement in fair value measurements within Level 3 during the years ended 31 December 2021 and 2020 are as follows: 2021 2020 US$’000 US$’000 At 1 January 2,550,909 2,552,837 Additions 523,817 270,361 Acquisition of subsidiaries 226,364 96,035 Changes in fair value of investment properties 211,414 214,853 Transfer from Level 2 to Level 3 3,702 222,103 Reclassification to assets held for sale – (6,732) Disposal of subsidiaries (259,895) (629,548) Disposal – (347,180) Exchange realignment (5,533) 178,180 At 31 December 3,250,778 2,550,909 The valuation of investment properties categorised within Level 2 of the fair value hierarchy is based on comparable market transactions for which the Group considers sales of similar properties that have been transacted in the open market. Below is a summary of the valuation techniques used and the key unobservable inputs to the valuation of investment properties categorised within Level 3 of the fair value hierarchy: Investment property details Valuation technique Key unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement Warehouse properties Income capitalisation Capitalisation rate: China: 5.00% to 6.25% (2020: 5.25% to 6.50%) Japan: 3.90% to 5.60% (2020: 4.10% to 4.30%) Hong Kong: 3% (2020: Nil) India: 8.00% (2020: Nil) The estimated fair value varies inversely against the capitalisation rate Discounted cash flows Discount rate: China: 8.00% to 9.25% (2020: 8.25% to 9.25%) Japan: 3.70% to 6.00% (2020: 3.90% to 4.00%) Hong Kong: 7.00% (2020: Nil) India: 12.85% to 13.70% (2020: Nil) The estimated fair value varies inversely against the discount rate Terminal capitalisation rate: China: 5.00% to 6.25% (2020: 5.25% to 6.50%) Japan: 4.00% to 5.50% (2020: 4.20% to 4.30%) Hong Kong: 3.00% (2020: Nil) India: 8.00% (2020: Nil) The estimated fair value varies inversely against the terminal capitalisation rate R E A C H I N G N E W H E I G H T S 192
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