| | | 2015 | | 2014 |
At the beginning of the year | | 445,936 | | 459,494 |
Transfers from investment property under construction | 85,239 | | 9,511 | |
Investments | 8,475 | | 45,947 | |
Total investments | | 93,714 | | 55,458 |
Transfers to investment property under construction | | - | | (9,279) |
Disposals | | (520) | | (21,356) |
Net gain (loss) from fair value adjustments on investment property (like for like) | (23,864) | | (33,841) | |
Net gain (loss) from fair value adjustments on investment property | 6,323 | | (4,540) | |
In profit or loss | | (17,541) | | (38,381) |
In other comprehensive income | | - | | - |
Transfers out of level 3 | | - | | - |
Total investment property (level 3) | | 521,589 | | 445,936 |
Lease incentives | | 4,504 | | 373 |
At the end of the year | | 526,093 | | 446,309 |
The Fund’s investment properties are valued by an external valuation expert on a quarterly basis. The external valuation expert is changed every three years. 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.
Since the accounting effect of lease incentives granted is included under non-current assets the recognised amount € 4,504,000 (2014: € 373,000) is deducted from the total fair value of investment properties.
Investments and investment property under construction | 2015 | 2014 |
High street retail | 85,238 | 54,765 |
Shopping centres | 77 | 86 |
Other retail location | 8,399 | 607 |
Total Investments and investment property under construction | 93,714 | 55,458 |
Disposals | 2015 | 2014 |
High street retail | - | - |
Shopping centres | - | - |
Other retail location | (520) | (21,356) |
Total disposals | (520) | (21,356) |
The significant assumptions made relating to the valuations are set out below.
2015 | | | | |
| | High street retail | Shopping centres | Other retail location | Total |
Current average rent (€/m²) | 273 | 205 | 139 | 225 |
Estimated rental value (€/m²) | 253 | 192 | 141 | 211 |
Gross initial yield | 6.2% | 7.7% | 8.0% | 6.8% |
Net initial yield | 5.5% | 7.0% | 4.6% | 5.9% |
Current vacancy rate (LFA m²) | 4.0% | 3.6% | 12.2% | 5.2% |
Current financial vacancy rate | 4.3% | 2.8% | 16.4% | 5.8% |
Long-term vacancy rate | 2.7% | 4.1% | 11.8% | 4.2% |
Long-term growth rental rate | 1.5% | 1.8% | 0.7% | 1.6% |
Average 10-year inflation rate (IPD Nederland) | | | | 1.5% |
2014 | | | | |
| | High street retail | Shopping centres | Other retail location | Total |
Current average rent (€/m²) | 254 | 209 | 149 | 219 |
Estimated rental value (€/m²) | 242 | 192 | 145 | 206 |
Gross initial yield | 6.9% | 7.6% | 5.9% | 7.0% |
Net initial yield | 5.2% | 6.5% | 7.2% | 5.9% |
Current vacancy rate (LFA m²) | 4.5% | 3.9% | 26.0% | 7.8% |
Current financial vacancy rate | 4.3% | 3.1% | 16.4% | 5.9% |
Long-term vacancy rate | 3.0% | 3.7% | N/A | 3.3% |
Long-term growth rental rate | 2.0% | 2.1% | 1.6% | 2.0% |
Average 10-year inflation rate (IPD Nederland) | | | | 1.9% |
The vacancy rate showed an upward trend due to some bankruptcies.
The total gain (loss) for the year included an unrealised gain of € 12,141 (2014: € 2,465) relating to investment properties that are measured at fair value at the end of the reporting period.
The valuation of the investment properties takes into account a rent-free period/rent incentives ranging from 1 to 3 months after occupation.
As at 31 December 2015, the Fund had unprovisioned contractual obligations for future repairs and maintenance of € 0.3 million (2014: € 0.1 million).
Direct operating expenses recognised in profit or loss include € 0.2 million (2014: € 0.1 million) relating to vacant investment property. Investment property includes buildings held under finance leases. The carrying amount is € nil (2014: € nil).
Sensitivity analysis
The appraisal of the portfolio implies a net initial yield of 5.9% (2014: 5.9%). 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 13.5 % lower (2014: 14.7% lower). In this situation, the Fund’s shareholders’ equity would have been € 76 million lower (2014: € 92 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 | (26,305) | 26,305 | (24,396) | 25,872 |
| | | 2015 | | 2014 |
Change net initial yield | - 25 bps | + 25 bps | - 25 bps | + 25 bps |
Value of the investment property change | 23,147 | (21,275) | 23,145 | (19,835) |