Annual Report 2022

207 2022 Annual Report Transport International Holdings Limited NOTES TO THE FINANCIAL STATEMENTS (Expressed in Hong Kong dollars unless otherwise indicated) 13 Investment properties, investment property under development, interest in leasehold land and other property, plant and equipment (continued) (c) Fair value measurement of properties (continued) (ii) Valuation techniques and inputs used in Level 2 fair value measurement The fair value of its industrial properties in Hong Kong as at 31 December 2022 was determined using market comparison approach by reference to recent sales price of comparable properties on a price per square foot basis using market data which is publicly available. (iii) Information about Level 3 fair value disclosures Valuation techniques Unobservable inputs Range Investment properties in Hong Kong – commercial properties Market comparison approach Discount/premium on quality of shops -75% to 30% (2021: -80% to 30%) Investment property under development in Hong Kong 2022: Residual method 2021: market comparison and residual valuation approaches Capitalisation rate Discount/premium on quality of redevelopment 3.5% (2021: -25% to 0%) The Group adopted a market comparison approach for all its commercial properties in Hong Kong for the years ended 31 December 2022 and 2021. The fair value of commercial properties using a market comparison approach is determined by reference to the recent sales price of comparable properties on a price per square foot basis, adjusted for a premium or a discount specific to the quality of the Group’s commercial properties compared to recent sales. Higher premiums for higher quality buildings will result in a higher fair value measurement. As at 31 December 2022, the fair value of investment property under development located in Hong Kong was determined using the residual method by estimating the value of the property when completed using income capitalisation method with reference to comparable sales transactions assuming that the property had been completed in accordance with the current development plan on the valuation date less the costs that will be incurred to complete the development with appropriate allowance for profit and risk. A higher capitalisation rate will result in low gross development value. As at 31 December 2021, the fair value of investment property under development located in Hong Kong is determined using market comparison and residual valuation approaches by reference to recent transaction data of nearby projects, and the recent sales price of comparable properties on a price per square foot basis, adjusted for a premium or a discount specific to the quality of the Group’s investment property under development compared to the recent transactions. A higher premium for higher quality redevelopment will result in a higher gross development value.