SWIRE PROPERTIES ANNUAL REPORT 2023 16. Investment Properties (continued) Information about level 3 fair value measurements using significant unobservable inputs Fair value Market rent per month1 HK$M Valuation technique HK$ per sq. ft. (lettable) Capitalisation rate At 31st December 2023 Completed Hong Kong 197,756 Income capitalisation Mid 10’s – Low 500’s 2.50% – 4.75% Chinese Mainland 52,221 Income capitalisation Less than 10 – High 200’s 5.50% – 6.50% U.S.A. 5,270 Income capitalisation Less than 10 – Mid 70’s 5.50% – 6.00% Sub-total 255,247 Under development Hong Kong 15,571 Residual2 Low 60’s – Low 100’s 1.20% – 3.75% Chinese Mainland 3,326 Sales comparison – – Sub-total 18,897 Total (Level 3) 274,144 At 31st December 2022 Completed Hong Kong 204,017 Income capitalisation Mid 10’s – Low 500’s 2.50% – 4.75% Chinese Mainland 37,714 Income capitalisation Less than 10 – Mid 200’s 5.50% – 6.25% U.S.A. 5,049 Income capitalisation Less than 10 – Low 70’s 5.00% – 5.50% Sub-total 246,780 Under development Hong Kong 14,052 Residual2 Low 60’s – Low 100’s 1.20% – 3.75% Chinese Mainland 3,264 Sales comparison – – Sub-total 17,316 Total (Level 3) 264,096 1 Market rent is determined in accordance with the definition of that term in the HKIS Valuation Standards 2020 of The Hong Kong Institute of Surveyors, which is “the estimated amount for which all interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently, and without compulsion”. It is in effect the rental income (exclusive of usual outgoings) which a property would be expected to earn if it were vacant and available to let. It is not necessarily the same as the rent which a tenant is actually committed to pay. 2 In using the residual method to make fair value measurements of investment properties, two additional unobservable inputs have been used. These are the estimated costs to complete the development and the developer’s estimated profit and margin for risk. 169