29 Investment properties

Investment properties

2017   2016
AED’000   AED’000
   
At 1 January  

 

Acquisition of investment properties in respect of settlement of a loan 5,070
Reclassified from assets classified as held for sale (Note 28) 83,000
Change in fair value (6,000)  
82,070
 

Investment properties comprise: 3 apartments located in Dubai Business Bay with a fair market value of AED 5,070 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 77,000 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.



      Significant    
  Valuation   unobservable    
  technique   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 6,344 thousand (2016: AED 6,885 thousand) and is recognised in the consolidated income statement under ‘other operating income’.