Investment properties (continued)
The Group’s property interests situated in Hong Kong of HK$3,291,290,000 (2009: HK$2,745,140,000) which are held under leasehold interests to earn rentals or for capital appreciation purposes are measured using the fair value model and are classified and accounted for as investment properties.
The fair value of the Group’s investment properties at 31 December 2010 and 2009 has been arrived at on a basis of valuation carried out by independent professional property valuers not connected with the Group:
Investment properties in Hong Kong – Savills Valuation and Professional Services Limited.
Investment properties in the USA – Cushman & Wakefield Western, Inc.
The valuations for investment properties were arrived at by using income capitalisation method which is determined based on the future cash flow of market rentals at market yield expected by property investors and applicable discount rates. The market rentals are also assessed by reference to the rentals achieved in other similar properties in the neighbourhood.
The carrying amount of investment properties includes land and buildings situated in Hong Kong and outside Hong Kong as follows:
3,118,290 173,000 901,007
2,592,140 153,000 906,571
Long leases in Hong Kong Medium-term leases in Hong Kong Freehold land outside Hong Kong
Annual Report 2010