Section C in the table ?risk description and management actions? describes the risk of large (unexpected) changes in demand. In our case, demand primarily concerns the need for airport traffic and the transport of passengers and cargo. An accurate forecast of this demand is of vital importance, for instance for the purpose of reliable long-term planning of the required capacity and investments in providing this capacity. A fall in demand immediately translates into a drop in revenue as well as profitability. After all, fixed costs make up a substantial part of the costs of our operations. A 1% drop in passenger numbers at Amsterdam Airport Schiphol will cause a drop in Schiphol Group?s turnover by approximately EUR 10 million. Profitability is expected to fall by a similar amount in that situation.
The property portfolio is becoming an increasingly important element of our business. As at 31 December 2007, we own EUR 911 million in property investments (EUR 690 million as at 31 December 2006). This property is valued at its fair value, and value movements are recognised directly in the profit and loss account. In recent years, these movements made a significant contribution to our profitability, as did the results from property developments and sales. Section L in the above table describes the price risk, which is part of the market risk. Developments in the market, and in the property market in particular, may cause the fair value of our property to drop. An average 10% rise in the net initial yield required by property investors would reduce the overall value of our offices and business premises by approximately EUR 65 million. Given the aforementioned accounting policy, our profitability in that situation would fall by the same amount.