The performance of real estate funds is mainly influenced by the inflows and outflows during the life of the fund and by the value changes of the real estate properties (Cervone, 2006). Following international standards (CFA Institute, 2009; IPD, 2008), the overall performance of the real estate market can therefore be attributed to the appreciation return and/or the income return. The role of each source of the performance of a real estate investment fund depends on the characteristics of the funds and the market (Baum and Devaney, 2008). Investorsí perception of the two performance sources could be different on the basis of the assetsí liquidity and the debt structure of the funds (Young et al., 1995). Generally, the rent income component, under certain conditions, is the less relevant for the institutional investors that manage a diversified portfolio following a medium-long term strategy. (Lee and Stevenson, 2005). The Italian property funds market has shown an enormous growth over the past few years, however, little is known about the key elements of the property funds performance. The paper considers the Italian market for the last decade and analyzes the annual reports of all public real estate funds, separating the appreciation return from the income return. By considering a wide period of time, the paper also evaluates if the role of income return in respect to the overall performance is influenced by some characteristics of the fund (i.e. asset diversification, concentration, leverage, etc.). The obtained results would be useful for the regulators and for the managing companies (SGR) as well, due to the lack of information about the performance componentsí dynamics for the Italian property fundsí industry.