| 19 | INVESTMENT PROPERTIES |
| 2017 | 2016 | |||||||
| RMB million | RMB million | |||||||
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Cost |
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At 1 January |
402 | 344 | ||||||
|
Transfer from property, plant and equipment (note 18) |
4 | 58 | ||||||
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Transfer to property, plant and equipment (note 18) |
(14 | ) | — | |||||
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At 31 December |
392 | 402 | ||||||
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Accumulated depreciation |
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At 1 January |
81 | 50 | ||||||
|
Transfer from property, plant and equipment (note 18) |
2 | 20 | ||||||
|
Transfer to property, plant and equipment (note 18) |
(5 | ) | — | |||||
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Charge for the year (note 11) |
12 | 11 | ||||||
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At 31 December |
90 | 81 | ||||||
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Net book amount |
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At 31 December |
302 | 321 | ||||||
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As at 31 December 2017, the fair value of the investment properties was approximately RMB628 million (2016: RMB604 million) according to a valuation performed by an independent professionally qualified valuer.
The investment properties are leased to third parties and related parties under operating leases. Rental income totalling RMB39 million (2016: RMB37 million, 2015: RMB30 million) was received by the Group during the year in respect of the leases.
As at 31 December 2017, the carrying amount of the investment properties for which the ownership certificates of buildings have not been obtained was RMB112 million (2016: RMB119 million). The directors of the Company are of the opinion that the Group legally owns and has the rights to use the aforesaid investment properties, and that there is no material adverse impact on the overall financial position of the Group.
Fair value hierarchy
The following table illustrates the fair value measurement hierarchy of the Group’s investment properties:
| Buildings | Fair value measurement using | |||||||||||||||
| Quoted prices | Significant | Significant | ||||||||||||||
| in active | observable | unobservable | ||||||||||||||
| markets | inputs | inputs | ||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
| RMB million | RMB million | RMB million | RMB million | |||||||||||||
|
Not measured at fair value but fair value is disclosed: |
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As at 31 December 2017 |
— | 198 | 430 | 628 | ||||||||||||
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As at 31 December 2016 |
— | 183 | 421 | 604 | ||||||||||||
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During the year, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 (2016: Nil).
The fair values of the buildings with comparable market price have been estimated using significant observable inputs and calculated by adjusted market price considering the condition and location of the buildings.
The fair values of the buildings without comparable market price have been estimated by a discounted cash flow valuation model using significant unobservable inputs such as estimated rental value, rent growth, long term vacancy rate and discounted rate.