162 NOTES TO THE FINANCIAL STATEMENTS 16. Investment Properties (continued) Geographical Analysis of Investment Properties 2024 HK$M 2023 HK$M Held in Hong Kong On medium-term leases (10 to 50 years) 29,801 30,994 On long-term leases (over 50 years) 181,275 189,043 211,076 220,037 Held in the Chinese Mainland On short-term leases (less than 10 years) 858 975 On medium-term leases (10 to 50 years) 58,684 54,989 59,542 55,964 Held in the U.S.A. Freehold 884 5,270 271,502 281,271 At 31st December 2024, investment properties of HK$17,782 million (2023: HK$14,948 million) are pledged as security for secured loans and other borrowings. On 17th November 2023, the Group and the Securities and Futures Commission entered into sale and purchase agreements for the sale of the Group’s interest in the 42nd to 54th floors (excluding the 49th floor) of the One Island East office tower in Hong Kong, for a total cash consideration of HK$5,400 million. Sale of the 45th to 54th floors (excluding the 49th floor) was completed in December 2023 and a loss on disposal was recognised in the consolidated statement of profit or loss during 2023. The 42nd to 44th floors of One Island East with a total fair value of HK$1,342 million, are included in the investment properties at 31st December 2024. The sale of each of these floors will be completed in accordance with the terms specified in the sale and purchase agreements before the end of 2028. Additions include capital expenditure in response to climate change. Such expenditure is intended to reduce carbon emission and energy use, with a view to mitigating climate-related risks and to meet carbon reduction targets. For further details, refer to the Sustainability Review section on pages 125 to 131. Refer to the table with heading “Audited Financial Information” on page 86 for details of the Group’s capitalised interest rates and the amount of interest capitalised. Valuation processes and techniques underlying management’s estimate of fair value The Group’s investment properties were valued at their fair values at 31st December 2024. 97% by value were valued by Cushman & Wakefield Limited and 1% by value were valued by another independent valuer, in each case on the basis of market value. The independent professionally qualified valuers hold recognised relevant professional qualifications in the jurisdictions in which they valued the Group’s investment properties and have recent experience in the locations and types of investment properties valued. The remaining properties were valued by management. The valuation is based on the highest and best use of the properties. The valuation of the Group’s completed investment property portfolio is derived by capitalising the rental income derived from existing tenancies with due provision for reversionary income potential and by making reference to recent comparable sales transactions available in the relevant property market. The valuation of the Group’s investment properties under development is derived by making reference to market capitalisation rates and recent comparable sales transactions in the relevant property market (on the assumption that the properties had already been completed at the valuation date). It also takes into account the construction cost already incurred and the estimated cost to be incurred to complete the project plus the developer’s estimated profit and a margin for risk.