Income drives European property market

The European property market is driven by income, according to a new report.

Invista Real Estate Investment Management's research discovered that over the last two years, the European property markets have continued to deliver attractive income returns, Property Magazine reported.

The income return on global information business IPD's Eurozone Index increased from 5.1 per cent in 2007 to 5.6 per cent at the end of 2009.

This is its highest level since 2003 and was able to cushion the impact of declining capital values.

As interest rates are expected to remain low in the short term, Invista expects to see an increasing amount of investor capital seeking income-producing property investments.

"Taking into account the subdued outlook for rental growth across Continental Europe, we therefore expect investors to remain focused on preserving and enhancing income returns at their currently attractive levels, and thus are unlikely to be attracted to higher risk, capital growth investments," Tim Francis, director of continental European strategy and research at Invista, commented.

Invista Real Estate Investment Management is the largest UK-listed real estate fund management group.

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