ESR IR 2021 - EN

66 STEP FORWARD Notes to Condensed Consolidated Financial Information 30 June 2021 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 2021 2020 (Unaudited) (Unaudited) US$’000 US$’000 At 1 January 2,550,909 2,552,837 Additions 460,883 152,127 Acquisition of subsidiaries 226,364 96,035 Changes in fair value of investment properties 145,774 117,777 Transfer from Level 2 to Level 3 – 212,115 Reclassification to asset held for sale – (42,281) Disposal of subsidiaries – (585,075) Exchange realignment (21,096) 6,788 At 30 June 3,362,834 2,510,323 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: 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: 5.70% to 7.10% (2020: 5.25% to 6.50%) Japan: 4.00% to 5.60% (2020: 4.10% to 4.30%) Hong Kong: 3.00% (2020: Nil) Indonesia: 7.50% (2020: Nil) The estimated fair value varies inversely against the capitalisation rate Discounted cash flow Discount rate: China: 8.25% to 9.25% (2020: 8.25% to 9.25%) Japan: 3.80% to 6.00% (2020: 3.90% to 4.00%) Hong Kong: 7.00% (2020: Nil) Indonesia: 9.50% (2020: Nil) The estimated fair value varies inversely against the discount rate Terminal capitalisation rate: China: 5.25% to 6.50% (2020: 5.25% to 6.50%) Japan: 4.10% to 5.50% (2020: 4.20% to 4.30%) Hong Kong: 3.00% (2020: Nil) Indonesia: 8.00% (2020: Nil) The estimated fair value varies inversely against the terminal capitalisation rate