12 Investment property
2023 | 2022 | |||
At the beginning of the year | 7,340,522 | 7,098,313 | ||
Investments | - | - | ||
Subsequent capital expenditure | 19,748 | 15,792 | ||
Additions | 19,748 | 15,792 | ||
Transfers to investment property under construction | - | - | ||
Transfers from investment property under construction | 370,242 | 524,597 | ||
Total transfers to/from investment property under construction | 370,242 | 524,597 | ||
Disposals | (181,072) | (183,892) | ||
Net gain (loss) from fair value adjustments on investment property (like-for-like) | (553,628) | (95,092) | ||
Net gain (loss) from fair value adjustments on investment property | (72,709) | (12,964) | ||
In profit or loss | (626,337) | (108,056) | ||
In other comprehensive income | - | - | ||
Transfers out of level 3 | - | - | ||
Movement of right of use ground leases | (4,351) | (6,232) | ||
Total investment property (level 3) at the end of the year | 6,918,752 | 7,340,522 |
The Fund’s investment properties are valued by independent external appraisers on a quarterly basis. On 31 December 2023, these properties were revalued by independent professionally qualified valuation experts with experience in the locations and categories of the investment properties valued (level 3). The carrying values of investment property as at 31 December 2023 and 31 December 2022, are based on the valuations reported by the external valuation experts. In estimating the fair value of the properties, the highest and best use of the properties is their current use. There was no change to the valuation technique during the year and there were no transfers between levels 2 and 3 during the year.
The fund sold eight assets for a total of EUR 169.3 million. The result on disposal of investment property is € -11.7 million.
The right of use of land is included as an integrated part of the investment property. To compare the externally appraised values of the investment property the lease liabilities are deducted from the investment property value.
2023 | 2022 | |
Investment property | 6,918,752 | 7,340,522 |
Less: lease liabilities | (122,438) | (124,316) |
Valuation as per valuation report | 6,796,314 | 7,216,206 |
The specifications of acquisitions, other capital expenditures and disposals are set out below.
Investments | 2023 | 2022 |
Randstad | 16,152 | 13,961 |
Mid East | 1,247 | 1,555 |
Brabantstad | 1,022 | 194 |
Non-core regions | 1,327 | 82 |
Total investments | 19,748 | 15,792 |
Disposals | 2023 | 2022 |
Randstad | (100,256) | (116,917) |
Mid East | (35,871) | (49,158) |
Brabantstad | (44,945) | (17,817) |
Non-core regions | - | - |
Total disposals | (181,072) | (183,892) |
The main assumptions with regard to the valuations are set out below.
2023 | |||||
Randstad | Mid East | Brabantstad | Non-core regions | Total | |
Current average rent (€/unit) | 1,297 | 1,093 | 1,147 | 907 | 1,268 |
Market rent (€/unit) | 1,402 | 1,145 | 1,219 | 1,003 | 1,367 |
Gross initial yield | 4.4% | 4.6% | 4.5% | 5.0% | 4.4% |
Net initial yield | 3.0% | 3.4% | 3.1% | 4.1% | 3.0% |
Current vacancy rate (no rental units) | 0.5% | 0.4% | 0.3% | 0.8% | 0.5% |
Current financial vacancy rate | 1.3% | 0.3% | 0.5% | 0.3% | 1.2% |
Long-term growth rental rate | 3.1% | 2.8% | 3.0% | 2.7% | 3.1% |
Risk free (NRVT) | 2.92% |
2022 | |||||
Randstad | Mid East | Brabantstad | Non-core regions | Total | |
Current average rent (€/unit) | 1,232 | 1,041 | 1,070 | 871 | 1,201 |
Market rent (€/unit) | 1,329 | 1,086 | 1,131 | 948 | 1,290 |
Gross initial yield | 3.8% | 4.1% | 4.0% | 4.2% | 3.9% |
Net initial yield | 2.6% | 2.8% | 2.7% | 1.9% | 2.6% |
Current vacancy rate (no rental units) | 0.6% | 0.3% | 0.6% | 1.7% | 0.6% |
Current financial vacancy rate | 1.7% | 0.4% | 1.1% | 0.7% | 1.5% |
Long-term growth rental rate | 2.9% | 2.6% | 2.6% | 2.4% | 2.8% |
Risk free (NRVT) | 0.0% |
The valuation of the investment properties took into account a vacancy period ranging from one (1) to three (3) months. There are no significant rental incentives.
The net valuation gain (loss) for the year included a positive fair value adjustment of € 26.0 million (2022: € 149.9 million) and a negative fair value adjustment of € 652.4 million (2022: € 257.4 million) relating to investment properties that were measured at fair value at the end of the reporting period.
Sensitivity analysis
The appraisal of the portfolio implies a net initial yield of 3.0% (2022: 2.6%). If the yields used for the appraisals of investment properties on 31 December 2023 had been 25 basis points higher (2022: 25 basis points higher) than was the case at that time, the value of the Fund’s investments and shareholders' equity would have been 7.6% lower (2022: 8.7% lower).
The table below presents the sensitivity of the valuation to changes in the most significant assumptions.
2023 | 2022 | |||
Change rental rates | -5% | 5% | -5% | 5% |
Value of the investment property change | (338,976) | 338,976 | (359,815) | 359,815 |
2023 | 2022 | |||
Change net initial yield | – 25 bps | + 25 bps | – 25 bps | + 25 bps |
Value of the investment property change | 611,411 | (517,983) | 759,643 | (627,223) |