ESR Group Limited Interim Report 2023 Notes to Condensed Consolidated Financial Information 30 June 2023 73 13. INVESTMENT PROPERTIES (continued) (d) Fair value hierarchy (continued) The movements in fair value measurements within Level 3 during the period are as follows: For the six months ended 30 June 2023 2022 (Unaudited) (Unaudited) US$’000 US$’000 At 1 January 2,624,209 3,250,778 Additions 124,448 105,270 Acquisition of subsidiaries – 44,941 Changes in fair value of investment properties 115,528 126,916 Disposal (32,203) – Disposal of subsidiaries (9,805) – Transfer from Level 2 to Level 3 372,848 – Reclassification to asset held for sale (203,936) (726,716) Exchange realignment (108,270) (212,295) At 30 June 2,882,819 2,588,894 The valuation of investment properties categorised within Level 2 of the fair value hierarchy are based on comparable market transactions that consider 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 as at 30 June 2023 and 31 December 2022: Investment property details Valuation technique Key unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement Logistics facility, Data centres, Land Income capitalisation Capitalisation rate: The estimated fair value varies inversely against capitalisation rate China: 5.40% to 6.85% (2022: 5.40% to 6.85%) Japan: 3.80% to 5.10% (2022: 3.80% to 5.10%) Hong Kong: N.A. (2022: 3.00%) India: 7.50% (2022: 7.75%) Discounted cash flow Discount rate: The estimated fair value varies inversely against the discount rate China: 7.25% to 9.00% (2022: 7.75% to 9.00%) Japan: 3.60% to 5.00% (2022: 3.80% to 5.00%) Hong Kong: N.A. (2022: 7.00%) India: 11.10% to 14.12% (2022: 9.83% to 13.85%) Terminal capitalisation rate: The estimated fair value varies inversely against the terminal capitalisation rate China: 4.25% to 6.25% (2022: 4.75% to 6.25%) Japan: 3.90% to 5.50% (2022: 3.90% to 5.50%) Hong Kong: N.A. (2022: 3.00%) India: 7.50% (2022: 7.50%)
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