| 7 | INVESTMENT PROPERTIES |
| Buildings RMB million |
||||
|
Cost |
||||
|
As at 1 January 2017 |
1,435 | |||
|
Additions |
1,931 | |||
|
|
|
|||
|
As at 31 December 2017 |
3,366 | |||
|
|
|
|||
|
Accumulated depreciation |
||||
|
As at 1 January 2017 |
(244 | ) | ||
|
Charge for the year |
(58 | ) | ||
|
|
|
|||
|
As at 31 December 2017 |
(302 | ) | ||
|
|
|
|||
|
Net book value |
||||
|
As at 1 January 2017 |
1,191 | |||
|
|
|
|||
|
As at 31 December 2017 |
3,064 | |||
|
|
|
|||
|
Fair value |
||||
|
As at 1 January 2017 |
2,201 | |||
|
|
|
|||
|
As at 31 December 2017 |
4,629 | |||
|
|
|
|||
| Buildings RMB million |
||||
|
Cost |
||||
|
As at 1 January 2016 |
1,435 | |||
|
Additions |
— | |||
|
|
|
|||
|
As at 31 December 2016 |
1,435 | |||
|
|
|
|||
|
Accumulated depreciation |
||||
|
As at 1 January 2016 |
(198 | ) | ||
|
Charge for the year |
(46 | ) | ||
|
|
|
|||
|
As at 31 December 2016 |
(244 | ) | ||
|
|
|
|||
|
Net book value |
||||
|
As at 1 January 2016 |
1,237 | |||
|
|
|
|||
|
As at 31 December 2016 |
1,191 | |||
|
|
|
|||
|
Fair value |
||||
|
As at 1 January 2016 |
2,238 | |||
|
|
|
|||
|
As at 31 December 2016 |
2,201 | |||
|
|
|
|||
The Company leases part of its investment properties to its subsidiaries and charges rentals based on the areas occupied by the respective entities. These properties are categorised as property, plant and equipment of the Group in the consolidated statement of financial position.
The Group has no restrictions on the use of its investment properties and no contractual obligations to each investment property purchased, constructed or developed or for repairs, maintenance and enhancements.
As at 31 December 2017, the net book value of investment properties which are in process to obtain title certificates is RMB1,872 million (31 December 2016: Nil).
The fair value of investment properties of the Group as at 31 December 2017 amounted to RMB4,629 million (as at 31 December 2016: RMB2,201 million), which was estimated by the Group having regards to valuations performed by an independent appraiser. The investment properties were classified as Level 3 in the fair value hierarchy.
The Group uses the market comparison approach as its primary method to estimate the fair value of its investment properties. Under the market comparison approach, the estimated fair value of a property is based on the average sale price of comparable properties recently sold, with consideration of the comprehensive adjustment coefficient, which is composed of a number of adjusting factors, including the time and the conditions of sale, the geographical location, age, decoration, floor area, lot size of the property and other factors.
Under the market comparison approach, an increase (decrease) in the comprehensive adjustment coefficient will result in an increase (decrease) in the fair value of investment properties.