NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2024 5 INVESTMENT PROPERTIES (CONT’D) (a) Investment properties comprise commercial, residential, hotel and industrial properties that are leased to external customers. Generally, each of the leases is fixed for a period of 1 to 30 years (2023: 1 to 30 years), and subsequent renewals are negotiated at prevailing market rates and terms. (b) During 2024, the Group and the Company disposed of certain investment properties of net carrying amount of $23.5 million and $21.2 million respectively to unrelated third parties for consideration of $165.6 million and $137.2 million. (c) During 2023, the Company disposed of certain investment properties of net carrying amount of $349.0 million to subsidiaries of the Group for consideration of $1,482.8 million. (d) As at 31 December 2024, investment properties of the Group with a total carrying amount of $1,502,492,000 (2023: $1,526,975,000) were mortgaged to (i) certain financial institutions to secure credit facilities (refer to notes 22 and 23 for more details of the facilities); and (ii) a lessee as collateral for security deposit held of $3,148,400 (2023: $3,700,000) which will be discharged on termination of the lease. (e) The Group undertook its annual review of the carrying amounts of investment properties for indicators of impairment. Where indicators of impairment were identified, the recoverable amounts were estimated based on internal or external valuations undertaken. The cash generating units (CGU) are individual properties. The recoverable amounts of the investment properties, being the higher of the fair value less costs to sell and value-in-use, were predominantly determined using the fair value less costs to sell approach, and were estimated using income capitalisation, direct comparison, standardised land value adjustment, discounted cash flow and residual methods (2023: income capitalisation, standardised land value adjustment and residual methods). Based on the impairment assessment undertaken in 2024, the Group recognised an impairment loss of $19,513,000 on two purpose-built student accommodation properties in the United Kingdom (UK), two private rented sector properties in Australasia and one commercial project under construction in China. The impairment loss recognised during the year was mainly due to higher purchaser acquisition costs for the said commercial properties in UK, lower gross development value estimated by the valuer of the said properties in Australasia, and the downturn in real estate market in China which remained challenging, along with higher than expected development costs incurred on the project in China. In 2023, the Group recognised an impairment loss of $43,749,000 on two commercial properties in the UK and one commercial project under construction in China. The impairment loss recognised in 2023 was mainly due to the higher capitalisation rates applied to the said commercial properties in UK amidst elevated interest rate environment and the downturn in real estate market in China which remained challenging, along with higher than expected development costs incurred on the project in China. The impairment loss recognised was recognised in “other operating expenses” and the investment properties segment. ANNUAL REPORT 2024 FINANCIALS 129
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