Global real estate opportunities

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: market where real estate stocks trade at substantial discounts. Prices dropped 15% (in British pounds) in the first half of 2007, to levels that seem worth buying. He finds prices compelling in continental Europe, too.

Asia leads

Absolute growth will be higher in Asia, he says, but stock prices are high, too. Roaring growth can’t be sustained in those markets if the rest of the world slows down.

Charles Schwab’s Global Real Estate Fund launched in May. David Siopack, co-portfolio manager of the fund, says that global investment truly became viable only in the past three years, as more countries developed REIT structures and private operating companies started going public. Siopack loves Singapore — a high-growth city state, strategically placed, with the world’s busiest port. Its property index jumped 10.2% in the second quarter of 2007 while most markets sank. He also likes Hong Kong (up 7.7%) and office properties in central Tokyo. Overall, Japanese property prices dropped 6.8% in the second quarter, but he sees central Tokyo as “like midtown Manhattan,” with rising demand for limited space.

Watch costs

Looking further afield, he’s interested in apartments and office properties in western Canada, where growth is driven by oil-field development.

As usual, you need to watch your expenses when buying a fund. Cohen & Steers is among the priciest, with 1.65% in annual costs plus an upfront sales load of 4.5%. No-load funds dispense with sales commissions and pare annual costs. For example, Schwab Global Real Estate Fund charges 1.2% a year; Alpine costs 1.17%; Fidelity International Real Estate costs 0.96%. For the names of more global and international funds, check http://www.investinreits.com .

ETFs include the WisdomTree International Real Estate Fund, and three index funds: Barclays iShares S&P World ex-US Property Index Fund, First Trust FTSE EPRA/NAREIT Global Real Estate

Index Fund and State Street’s SPDR DJ Wilshire International Real Estate.

In this niche, however, managers generally outperform the indexes, according to Mike Kirby, director of research at Green Street Advisors, specialists in REIT consulting.