12 Investment property

At the beginning of the year459,494474,978
Transfers from investment property under construction9,511-
Total investments55,45818,878
Transfers to investment property under construction(9,279)-
Net gain (loss) from fair value adjustments on investment property (like for like)(33,841)(31,821)
Net gain (loss) from fair value adjustments on investment property (4,540)(2,273)
In profit or loss(38,381)(34,094)
In other comprehensive income- -
Transfers out of level 3- -
Total investment property (level 3)445,936459,494
Lease incentives373336
Less: classified as held for sale- -
At the end of the year446,309459,830
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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 2014, 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 2014, and 1 January 2014, 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 € 373,000 (2013: € 336,000) is deducted from the total fair value of investment properties.

Investments and investment property under construction20142013
High street retail54,76518,878
Shopping centres86-
Other retail location607-
Total Investments and investment property under construction55,45818,878
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High street retail- -
Shopping centres- -
Other retail location(21,356)(268)
Total disposals(21,356)(268)
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The significant assumptions made relating to the valuations are set out below.

 High street retailShopping centresOther retail locationTotal
Current average rent (€/m²)254209149190
Estimated rental value (€/m²)242192145179
Gross initial yield6.9%7.6%5.9%7.0%
Net initial yield5.2%6.5%7.2%5.9%
Current vacancy rate (LFA m²)4.5%3.9%26.0%7.8%
Current financial vacancy rate4.3%3.1%16.4%5.9%
Long-term vacancy rate3.0%3.7%N/A3.3%
Long-term growth rental rate2.0%2.1%1.6%2.0%
Average 10-years inflation rate (IPD Nederland)   1.9%
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 High street retailShopping centresOther retail locationTotal
Current average rent (€/m²)243206162210
Estimated rental value (€/m²)218191154193
Gross initial yield6.6%7.2%7.0%6.9%
Net initial yield5.9%6.4%5.8%6.1%
Current vacancy rate (LFA m²)2.4%4.9%21.1%7.7%
Current financial vacancy rate1.5%3.7%16.2%5.0%
Long-term vacancy rate4.1%4.4%N/A4.2%
Long-term growth rental rate2.2%2.2%2.0%2.1%
Average 10-years inflation rate (IPD Nederland)   2.1%
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The vacancy rate showed an upward trend due to some bankruptcies.

The total gain (loss) for the year included an unrealised gain of € 2,465 (2013: € 921) 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 2014, the Fund had unprovisioned contractual obligations for future repairs and maintenance of € 0.1 million (2013: € 0.2 million).

Direct operating expenses recognised in profit or loss include € 0.1 million (2013: € 0.2 million) relating to vacant investment property. Investment property includes buildings held under finance leases. The carrying amount is € nil (2013: € nil).

Sensitivity analysis

The appraisal of the portfolio implies a net initial yield of 5.9% (2013: 6.1%). If the yields used for the appraisals of investment properties on 31 December 2014 had been 100 basis points higher (2013: 100 basis points higher) than was the case at that time, the value of the investments would have been 14.7 % lower (2013: 14.2% lower). In this situation, the Fund’s shareholders’ equity would have been € 92 million lower (2013: € 70 million lower).

The table below presents the sensitivity of the valuation to changes in the most significant assumptions.

  2014 2013
Change rental rates-5%5%-5%5%
Value of the investment property change(24,396)25,872(20,811)20,811
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  2014 2013
Change net initial yield- 25 bps+ 25 bps- 25 bps+ 25 bps
Value of the investment property change23,145(19,835)13,953(13,077)
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