6 INVESTMENT PROPERTIES (continued) Fair value hierarchy As at 31 December 2023, the fair value measurement for the investment properties of $4,148.3 million (2022: $4,385.9 million) has been categorised as a Level 3 fair value based on the inputs to the valuation technique used (see note 3.4). Level 3 fair values The Level 3 fair value table which shows a reconciliation from the opening to the ending balance is set out in the table above. Valuation technique and significant unobservable inputs The following table shows the Group’s valuation technique used in measuring the fair value of investment properties, as well as the significant unobservable inputs used. Type Valuation technique Significant unobservable inputs Inter-relationship between key unobservable input and fair value measurement Investment properties – Singapore Capitalisation approach • Capitalisation rate 4.25% – 6.50% (2022: 4.25% – 6.50%) The estimated fair value increases with decreases in the capitalisation rate. Investment properties – PRC Direct comparison • Average value of RMB6,500 – RMB14,500 (2022: RMB6,500 – RMB14,500) per square metre The estimated fair value increases with increases in average value of a similar class of assets. Discounted cash flow method • Discount rate 8.00% – 8.25% (2022: 8.00% – 8.50%) • Terminal yield rate 5.00% – 5.50% (2022: 5.25% – 5.75%) The estimated fair value increases with decreases in the discount rate and terminal yield rate. Capitalisation approach • Capitalisation rate 5.50% (2022: 5.50%) The estimated fair value increases with decreases in the capitalisation rate. Investment properties under development – PRC Capitalisation approach • Capitalisation rate 4.00% – 6.50% (2022: 4.00% – 6.50%)) The estimated fair value increases with decreases in the capitalisation rate. Direct comparison • Average value of RMB4,075 – RMB75,000 (2022: RMB4,075 – RMB75,000) per square metre The estimated fair value increases with increases in average value of a similar class of assets. Security As at 31 December 2023, investment properties together with land use rights with a total carrying amount of $3,572.2 million (2022: $3,808.4 million) were pledged as security for loans and borrowings (see note 12). Notes to the Financial Statements Year ended 31 December 2023 178 PERENNIAL HOLDINGS PRIVATE LIMITED
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