Investors poured a record 3.3bn into real estate funds in 2002, but talk of a bubble started to grip the market at the end of the year and there have been some fund outflows. 

Mr Lieber, a real estate fund pioneer, launched the first US public mutual fund to focus on international real estate shares at Evergreen Funds in 1989.
 
At Alpine?s International Real Estate fund, he invests in real estate owners, operators and developers. Mr Lieber?s strategy is to buy stocks he believes are trading at relatively low prices with regard to their long-term values.
 
He researches property availability and price in individual markets, and factors in currency trends and the pace of economic growth.
 
The international fund returned 5.3 per cent in 2002, compared with the Moody?s Real Estate Equity Fund index, up 3 per cent, as well as the S&P 500 index, which lost 20.7 per cent over the year.
 
Mr Lieber currently likes some south-east Asian markets, in particular residential and commercial properties in Thailand, Malaysia, Hong Kong and Singapore.
 
''The underlying value of these properties has dropped in many of these markets from the early or mid-1990s. As aresult, stocks have dropped from trading at fair value,'' he said.
 
He thinks those stocks will prosper if local economies improve on a stronger US economy.
 
''Our view is [that] the really cheap stocks are in Asia.
 
''Thailand has seen decent [gross domestic product] growth. The most bearish scenario is if the US does not recover.''
 
The international fund is invested one-third each in Asia, Europe and the Americas.
 
Mr Lieber says the economies of China, South Korea, Thailand, the UK and Spain are strong, while the office-space markets in Singapore, Indonesia, the Philippines, Hong Kong and Tokyo?s are still weak.
 
However, property fundamentals of supply and demand are not always aligned with economic trends, he says.
 
Even though Tokyo?s office market is weak, with a deluge of new space due in the next 16 months, retail malls have performed well.
 
Mr Lieber says the fall-out from the technology boom is most evident in Scandinavia, and has contributed to excess office supply in Milan, Madrid and Amsterdam.
 
In the UK, only residential activity has stayed solid. The country saw a 30 per cent appreciation in house prices in 2002.
 
Another fund, Alpine?s US Real Estate Equity, is geared more to the earlier stage of the real estate cycle, looking at home builders, operating companies and Reits (real estate investment trusts).
 
Finally, Alpine Realty Income & Growth Fund, is more defensive.
 
Much of the concern over a real estate bubble stems from slowing residential home sales and high commercial vacancies in the US. Mr Lieber says home prices should stay strong unless the US goes into deflation. Demand will also be strong if interest rates stay at their current levels.
 
On the downside, US office space and apartment vacancies are growing in some regions, and if there are more job cuts, that would have an impact on demand.

Financial Times

Publisher: Financial Times
Source: Financial Times