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Income returns encourage Ignis to look at property trust

Ignis is considering launching a property income investment trust.

Head of property Gary Hutcheson says income returns are currently in the region of 7.75-8 per cent for property. He says: “Although there are no concrete plans at this stage, now is the perfect time for a product of this ilk as people are searching for income while capital values have either stopped or have slowed in decline across the property asset class. This sort of product could offer a solution.”

Hutcheson says he has been surprised by some calling a turnaround in the property sector. The prime market, which is where his team focuses, has improved, but he says there are still concerns in the secondary area.

Hargreaves Lansdown head of research Mark Dampier says: “There are reasons for optimism with yields around 4 per cent over gilts. I am just a bit worried that a flood of liquidity could make it hard for a fund to fully invest and that may mean a vehicle gets nowhere near 8 per cent. It is all about a good tenant and strong yield.”

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