13 Investment property under construction
2023 | 2022 | |||
At the beginning of the year | 373,173 | 639,153 | ||
Investments | 102,765 | 256,260 | ||
Transfers to investment property | (370,242) | (524,597) | ||
Transfers from investment property | - | - | ||
Total transfers to/from investment property | (370,242) | (524,597) | ||
Net gain (loss) from fair value adjustments on investment property under construction | (9,695) | 2,395 | ||
In profit or loss | (9,695) | 2,395 | ||
In other comprehensive income | - | - | ||
Transfers out of level 3 | - | - | ||
Movement of right of use ground leases | - | (38) | ||
At the end of the year | 96,001 | 373,173 |
The right of use of land is not applicable for investment property under construction.
The investment property under construction relates to acquisitions and is being developed by third parties. For a list of the investment properties under construction and investment commitments, see Note 21.
The net valuation gain (loss) for the year included a positive fair value adjustment of € 3.1 million (2022: € 36.3 million) and a negative fair value adjustment of € 12.8 million (2022: € 33.9 million) relating to investment properties under construction that are measured at fair value at the end of the reporting period.
The as if completed value of the investment property under construction is determined by independent external valuation experts.
The specifications of investments in investment property under construction are set out below.
Investments | 2023 | 2022 |
Randstad | 92,338 | 229,782 |
Mid East | 858 | 3,280 |
Brabantstad | 9,567 | 23,198 |
Non-core regions | - | - |
Total investments | 102,764 | 256,260 |
The main assumptions with regard to the valuations are set out below.
2023 | ||||
Randstad | Mid East | Brabantstad | Total | |
Gross initial yield | 4.9% | 0.0% | 4.4% | 4.9% |
Net initial yield | 3.8% | 0.0% | 3.4% | 3.8% |
Long-term growth rental rate | 2.8% | 0.0% | 3.7% | 2.9% |
Average 10-year inflation rate (NRVT) | 2.9% | 2.9% | 2.9% | 2.9% |
Estimated average development profit on completion | -12.8% | 0.0% | -26.4% | -14.2% |
Estimated average percentage of completion | 68.6% | 0.0% | 86.5% | 70.6% |
Construction costs (€/m²) | 5,073 | - | 3,683 | 4,874 |
2022 | ||||
Randstad | Mid East | Brabantstad | Total | |
Gross initial yield | 4.3% | 4.5% | 3.7% | 4.3% |
Net initial yield | 3.7% | 3.7% | 3.0% | 3.7% |
Long-term growth rental rate | 2.5% | 2.5% | 2.6% | 2.5% |
Average 10-year inflation rate (NRVT) | -0.2% | -0.2% | -0.2% | -0.2% |
Estimated average development profit on completion | (0.5%) | 6.5% | (23.5%) | (1.1%) |
Estimated average percentage of completion | 75.3% | 89.8% | 37.4% | 74.1% |
Construction costs (€/m²) | 5,025 | 3,829 | 3,682 | 4,936 |