The triple threat of a massive credit crunch, a sharp economic slowdown and turmoil in the equity markets keeps U.S. real estate investors up at night, worrying about their portfolios. Those who ventured into international real estate in recent years are sleeping much more soundly. Higher growth rates abroad and a falling U.S. dollar are boosting some international real estate returns to levels that exceed the performance of domestic portfolios. This outperformance showed up in the securitized real estate indices during the past three years (see “Real Estate Securities: Total Returns,” below) and will likely show up more clearly in the private equity indices in the years ahead.

Few countries will be totally immune from the ripple effects of the world’s most severe credit contraction in decades or from the slowdown in the world’s largest economy. Yet, the diversity of foreign real estate markets virtually assures other countries are not likely to move in lockstep with