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Valuation techniques and key unobservable inputs Valuation techniques used to derive fair
values
The valuations have been prepared on the basis of market value which is defined in the
RICS Valuation Standards as 'the estimated amount for which an asset or liability should
exchange on the date of the valuation between a willing buyer and a willing seller in an
arm's length transaction after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion'. Market value as defined in the RICS
Valuation Standards is the equivalent of fair value under IFRS.
Unobservable inputs
These include but are not limited to: the estimated rental value ('ERV') based on market
conditions prevailing at the valuation date; the future rental growth - the estimated average
increase in rent based on both market estimations and contractual situations; the equivalent
yield (defined as the weighted average of the net initial yield and reversionary yield); and the
physical condition of the individual properties determined by inspection.
A decrease in ERV would decrease fair value. A decrease in the equivalent yield would
increase the fair value. An increase in the remaining lease term would increase the fair
value. Sensitivity of measurement of significant unobservable inputs
As described in note 2 to the financial statements the determination of the valuation of the
Group's investment property portfolio is open to judgements and is inherently subjective by
nature.
Sensitivity analysis - impact of changes in initial yields and passing rent
Initial yields of the Group's i