28 Investment properties

Investment properties

  2018   2017
  AED’000   AED’000
       
At 1 January 82,070  
Acquisition of investment properties in respect of settlement of a loan   5,070
Reclassified from assets classified as held for sale   83,000
Change in fair value (2,592)   (6,000)
 
79,478
 
82,070

 

Investment properties comprise: 3 apartments located in Dubai Business Bay with a fair market value of AED 4,478 thousand which were held as a collateral in respect of loan whereas the Group has acquired these apartments in respect of settlement of loan; and a commercial building in Al Nahyan area in Abu Dhabi with a fair market value of AED 75,000 thousand.

Commercial Building Al Nahyan Abu Dhabi

An independent valuer for the valuation of this investment property adopts the income method in valuing the investment properties. This method calculates the value of the property by taking the estimated net income of property and capitalising it with an appropriate yield, which reflects market sentiment and situation. To value the property, the independent valuer has used the current rental income and adjusted for outgoings such as void period and maintenance towards the property. The prime location, maintenance and occupancy levels are also considered.

  Valuation   Significant    
  technique

unobservable input   Range
           
Investment property

Income method

 

Estimated annual market rent income

 

AED 7.6 – 8.7 million

     

Yield

 

8.5% – 9.5%

     

Occupancy level

 

95% – 100%

 

The rental income recognised is AED 6,554 thousand (2017: 6,344 thousand) and is recognised in the consolidated income statement under ‘other operating income’.