MKH Annual Report 2017

42. FAIR VALUE HIERARCHY (continued) Description of valuation techniques used and key unobservable inputs to valuation on investment properties measured at level 3 are as follows: (continued) Property category Valuation technique Significant unobservable inputs Range Investment properties Office and shoplot Investment method Estimated average rental rate RM4 per square feet per month Estimated price per parking bay RM17,000 - RM28,300 Estimated outgoings per square feet per month RM0.25 Term yield 7.5% Education centre Investment method Estimated average rental rate RM0.80 per square feet per month Estimated outgoings per square RM0.04 feet per month Term yield 6.00% Sinking fund 2.00% Void rate 2.00% The estimated fair value would increase/(decrease) if: • Estimated rental/average rental rate per square feet per month were higher/(lower) • Estimated price per parking bay per month were higher/(lower) • Estimated outgoings per square feet per month lower/(higher) • Rent growth rate per annum were higher/(lower) • Void rate lower/(higher) • Term yield rate lower/(higher) • Reversionary yield rate lower/(higher) • Sinking fund rate lower/(higher) • Construction price per square feet higher/(lower) Direct Comparison method Under the direct comparison method, a property’s fair value is estimated based on comparison of current prices in an active market for similar properties in the same location and condition and where necessary, adjusting for location, accessibility, visibility, time, terrain, size, present market trends and other differences. Fair value of properties derived using direct comparison method have been generally included in Level 3 fair value hierarchy due to the adjustments mentioned above. The most significant input into this valuation approach is price per square feet of comparable properties. Notes to the Financial Statements For the Financial Year ended 30 September 2017 202 MKH Berhad • Annual Report 2017