| | | 2015 | | 2014 |
At the beginning of the year | | 547,528 | | 441,326 |
Transfer from investment property under construction | | 8,157 | | - |
Investments | | 8,103 | | 131,400 |
Disposals | | (69,489) | | - |
Net gain (loss) from fair value adjustments on investment properties (like for like) | (23,037) | | (17,856) | |
Net gain (loss) from fair value adjustments on investment properties | 2,426 | | (7,342) | |
In profit or loss | | (20,611) | | (25,198) |
In other comprehensive income | | - | | - |
Transfers out of level 3 | | - | | - |
Total investment property (level 3) | | 473,688 | | 547,528 |
Lease incentives | | 4,509 | | 5,825 |
At the end of the year | | 478,197 | | 553,353 |
The Fund’s investment properties are valued by an external valuation expert on a quarterly basis.
On 31 December 2015, these properties were revalued by independent professionally qualified valuation experts who hold a recognised relevant professional qualification and had recent experience in the locations and categories of the investment properties valued. The carrying values of investment property as at 31 December 2015, and 1 January 2015, are in line with the valuations reported by the external valuation experts.
The lease incentives granted are included in the total fair value of investment properties. For the year 2015 the amount of lease incentives is € 4.5 million (2014: € 5.8 million).
Investments | 2015 | 2014 |
Amsterdam | 9,963 | 29,673 |
Rotterdam | 1,154 | 97,738 |
Utrecht | 2,455 | 645 |
The Hague | 2,683 | 2,748 |
Non-core regions | 5 | 596 |
Total investments | 16,260 | 131,400 |
Disposals | 2015 | 2014 |
Amsterdam | (6,889) | - |
Rotterdam | (9,258) | - |
Utrecht | (7,182) | - |
The Hague | - | - |
Non-core regions | (46,160) | - |
Total disposals | (69,489) | - |
The significant assumptions made relating to the valuations are set out below.
2015 | | | | | |
| | Amsterdam | Rotterdam | Utrecht | The Hague | Total |
Current average rent (€/m²) | 148 | 165 | 171 | 198 | 178 |
Current average rent (€/PP) | 1,983 | 3,720 | 1,226 | 1,719 | 2,138 |
Estimated rental value (€/m²) | 154 | 163 | 166 | 185 | 172 |
Estimated rental value (€/PP) | 1,971 | 4,143 | 1,400 | 1,754 | 2,233 |
Gross initial yield | 4.3% | 6.4% | 3.6% | 7.5% | 6.4% |
Net initial yield | 2.4% | 6.0% | (0.1)% | 5.4% | 4.6% |
Current vacancy rate (LFA m²) | 47.3% | 26.1% | 69.6% | 13.3% | 26.2% |
Current vacancy rate (PP) | 80.3% | 56.9% | 47.7% | 19.4% | 44.8% |
Current vacancy rate (financial) | 22.2% | 18.4% | 67.9% | 15.3% | 19.7% |
Long-term vacancy rate | 2.2% | 11.3% | 19.0% | 11.4% | 9.5% |
Long-term growth rental rate | 1.6% | 1.8% | 0.6% | 1.4% | 1.5% |
Average 10-year inflation rate (IPD Nederland) | | | | | 1.5% |
2014 | | | | | | |
| | Amsterdam | Rotterdam | Utrecht | The Hague | Non-core | Total |
Current average rent (€/m²) | 154 | 171 | 169 | 199 | 125 | 169 |
Current average rent (€/PP) | 1,859 | 2,341 | 1,132 | 1,704 | 639 | 1,677 |
Estimated rental value (€/m²) | 152 | 167 | 160 | 190 | 105 | 160 |
Estimated rental value (€/PP) | 1,880 | 3,383 | 1,224 | 1,752 | 596 | 1,846 |
Gross initial yield | 9.4% | 6.1% | 8.1% | 7.2% | 12.8% | 8.2% |
Net initial yield | 6.2% | 4.4% | 8.1% | 5.7% | 9.8% | 6.3% |
Current vacancy rate (LFA m²) | 52.6% | 27.4% | 66.0% | 14.7% | 15.2% | 26.3% |
Current vacancy rate (PP) | 72.5% | 35.5% | 33.5% | 18.8% | 5.4% | 33.9% |
Current vacancy rate (financial) | 3.5% | 31.4% | 28.6% | 7.4% | 11.2% | 10.1% |
Long-term vacancy rate | 6.0% | 25.1% | 53.9% | 6.2% | 19.6% | 13.9% |
Long-term growth rental rate | 1.6% | 0.6% | 0.6% | 1.5% | 1.1% | 1.4% |
Average 10-year inflation rate (IPD Nederland) | | | | | | 1.9% |
The valuation of the investment properties takes into account a rent-free period/rental incentives ranging from 1 to 12 months after occupation.
The total gain (loss) for the year included an unrealised gain of € 8,664 (2014: € 1,216) relating to investment properties that are measured at fair value at the end of the reporting period.
As at 31 December 2015, the Fund had unprovisioned contractual obligations for future repairs and maintenance of € 3.2 million (2014: € 3.2 million).
Direct operating expenses recognised in profit or loss include € 0.9 million (2014: € 0.6 million) relating to vacant investment property. Investment property includes buildings held under finance leases of which the carrying amount is nil (2014: nil).
Sensitivity analysis
The appraisal of the portfolio implies a net initial yield of 4.6% (2014: 6.3%). If the yields used for the appraisals of investment properties on 31 December 2015 had been 100 basis points higher (2014: 100 basis points higher) than was the case at that time, the value of the investments would have been 23.2% lower (2014: 13.7% lower). In this situation, the Fund’s shareholders’ equity would have been € 119 million lower (2014: € 63 million lower).
The table below presents the sensitivity of the valuation to changes in the most significant assumptions.
| | | 2015 | | 2014 |
Change rental rates | – 5% | 5% | – 5% | 5% |
Value of the investment property change | (23,910) | 23,910 | (23,193) | 23,193 |
| | | 2015 | | 2014 |
Change net initial yield | – 25 bps | + 25 bps | – 25 bps | + 25 bps |
Value of the investment property change | 27,454 | (24,626) | 19,163 | (17,700) |