Background and problem: The IFRS/IAS standards resulted in changes of required
information from quoted companies. The standard IAS 40 implicated a possibility of
valuing investment property at fair value, which has contributed to new disclosure
requirements connected to the fair value model. We found it interesting to examine the
real estate companies’ fulfilment of the new disclosure requirements and the resources
needed to fulfil the requirements. The users’ opinion about disclosed information was
considered interesting to examine and whether the information emanating from the new
disclosure requirements ameliorated the users’ possibility to valuate investment property.
Purpose: The thesis should describe and analyze the disclosed information regarding
investment property provided by the real estate industry. To be able to fulfil the main
purpose the study will examine the fulfilment of the disclosure requirements, describe
resources demanded to meet the increased demand of information and examine if the
disclosed information by the real estate companies corresponds to the users’ needs.
Method: The study has a combined quantitative and qualitative approach. Secondary data
sources consisted of the annual reports from the 15 real estate companies quoted on OMX
Nordic Exchange Stockholm holding investment property. Primary data consisted of six
interviews representing real estate companies, banks and analysts.
Results and conclusions: The fulfilment of the disclosure requirements varies. The
balancing of carrying amounts is an area where the companies are proficient in disclosing
essential information. The examination has also found four areas where shortages could
be distinguished: (1) the criteria to separate investment property, (2) specification of
direct costs contributed or not to rentals, (3) variables used in the valuation model and (4)
disclosing essential risks and uncertainties. The resources needed to meet the increased
demand for information have increased and the study has found the solutions being
reallocation, rationalization and consulting external experts. The users are mainly
satisfied with the disclosed information but would like more information related to the
valuation of investment property and project property. Sensitivity analysis is a tool
enabling a quick overview of the company’s influencing factors but a standardisation of
the parameters would be preferable.
Recommendations for future research: Three areas where demands...
