Like people coping with a harsh winter, U.S. real estate stock investors may be tempted to think the time is right to move their money to a balmier climate. Certainly, in 2007 if you'd sold at home and bought in Asia, things would have worked out nicely. Even as North American total returns nosedived by 14.92%, the opposite was true in Asia where total returns topped 14.80%. Meanwhile, in Europe total returns fell by a whopping 24.50%.

As of Feb. 21, total returns for global REITs were down 7.67% from the start of 2008. In North America, they were down 5.86%, and 13.50% in Asia. Only in Europe are the numbers up — and by a meager 2.07%, according to the FTSE EPRA/NAREIT Global Real Estate Index.

“We could well see negative returns for global REITs, particularly if the credit situation becomes more protracted,” says Steven Carroll, managing director of global equity investment at CBRE Investors in Baltimore. Cautious direct investors could help keep REITs down, he warns. Fewer sales make asset values less clear, and without good comparables, REIT net asset values are anybody's guess.

But that uncertainty doesn't mean money can't be made in REITs this year. Market by market, Carroll and other observers believe profits and losses will continue to be unevenly distributed.

Bad day, mate

In Asia, a high spot last year, the weather may remain unsettled. Although REITs ended the year up 14.80%, the move came in a sudden gust in December, according to a Deloitte & Touche report.

Australian real estate stocks have been particularly buffeted. Once considered a haven “if you're worried about the mad men and gamblers in Hong Kong,” according to David Faulkner, a regional director at Colliers International in Hong Kong, Australian REITs faced a financial monsoon in December after Centro Properties group was unable to refinance $3.5 billion in short-term debt. The shopping mall developer lost 76% of its value in one day alone. Since then, it has mostly fallen, and now stands at 56 cents a share — a far cry from its 52-week high of $9.07.

The market is experiencing what may be a more lasting change: Hong Kong appears to be losing out to Singapore as Asia's REIT capital. The latest Asian REIT study for the first half of 2007 by CB Richard Ellis found that Singapore led Hong Kong in market capitalization with $19.2 billion compared with $8.6 billion in Hong Kong.

“The authorities here have made it too difficult and too restrictive and people just can't be bothered,” says Faulkner, referring to Hong Kong.

The pain in Spain

Europe's outlook also is mixed. “Spain is a disaster area,” says Patrick Sumner, head of property equities at Henderson Global Investors in London, who predicts no bottom to falling prices for a few years. “Too many people borrowed too much money and the companies themselves are sitting on land banks that are eating a hole in their balance sheet,” he says.

Germany and France missed most of the recent price runup and look more attractive to Sumner. Unibail-Rodamco was up 17% last year, he says. Eastward, Sumner likes some Ukrainian and Russian property stocks that now sell at 25% to 50% discounts to their net asset value. Two favorites: house builder XXI Century in the Ukraine, and Rose Group International, a Moscow developer. Both have connections necessary to buy land, apply for permits, and retain contractors.

Somewhere between the extremes are real estate stocks in the United Kingdom, which are still in a funk, torn between flat or falling asset values and strong rents. In the fourth quarter, for instance, British Land lost 17% of its net asset value when property values fell by 8% in spite of a rise of 12.5% in net income.

But Sumner is hopeful, noting that rallies in real estate stocks generally precede a rise in property values by about six months. This navigator's red sky at night: after touching down to £8.24 back on Nov. 17, shares in British Land are now back up to £9.75. “Have we passed the point of maximum pessimism?” asks Sumner. “It's possible that we have.”

Bennett Voyles is a veteran commercial real estate reporter and National Real Estate Investor's Paris correspondent. For questions or comments, e-mail benvoyles@yahoo.com.