The best bets for 2008 as far as investment goes, Miller explained, include: husband capital or building relationships; buy distressed loans; hold core properties; focus on global pathway markets; concentrate on operations; buy public REITs; buy broker, homebuilder and mortgage company stocks; staff up the workout teams; and use demographic strategies. As far as things to avoid in investment, Miller said to stay away from condominiums “unless you are buying distressed loans,” construction loans as “there is too much risk,” taking on extra debt, high-growth markets with soft fundamentals as “they'll only get softer” and second- and third-tier markets as “investors need higher risk premiums.”

For development for 2008, Miller suggested thinking green, focusing on mixed-use and infill and said to build transit-oriented development. For property sectors, he says to buy multifamily, buy or hold industrial, buy residential building lots, but to exercise caution in office and hotels and to “chill on retail.”

“Underwriting standards in the year ahead are going to become more stringent,” Miller noted, and more than 78% of the reports' respondents agree. Yet despite this apprehension, respondents expect most real estate investments to outperform both the US stock and bond returns in the year ahead and are counting on ample capital sources to cushion the property markets.

Miller concluded that “New York City is the King Kong market in the US.” Markets to watch are those that have positioned themselves as 24-hour cities with global pathway to international markets. He noted that cities such as Denver though, have demonstrated that it is possible to transform a city into a 24-hour global pathway with master planning around infrastructure, transportation and economic development. Other top markets Miller identified from the report include Washington DC, Los Angeles, San Francisco, Boston and San Diego. Markets to watch, he noted, were San Jose, CA; Honolulu; Austin; TX; Portland, OR; Sacramento; Las Vegas; Orlando; Tampa, FL; Salt Lake City; Jacksonville, FL; Nashville; and Minneapolis.

Following Miller's presentation, four panelists including Veronica Hackett, managing partner of the Clarett Group; Richard Saltzman, president of Colony Capital LLC; Adam Raboy, managing partner of Credit Suisse First Boston, and Stephen Furnary, chairman and CEO of ING Clarion, responded with similar optimism. “The real $64 question is the economy,” Saltzman explained. “Generally speaking, I would say cap markets are doing what they are supposed to do.”

Furnary agreed that the future outlook is really about the economy. “I find it fascinating that if you go back 12 months, there were no warning signs that I am aware of about the subprime markets, so you can see how you can't predict the future,” he noted. “It is a wake-up call. I feel good about where we are right now.”

Hackett explained that it is a business of cycles and the cycles weed out some who maybe should not have been in the industry in the first place. “I am optimistic,” she said. “This cycle gives us the ability to buy product at a rational level.”

Raboy agreed with Hackett's optimism, stating that “we feel like the world is better today than six months ago.” For the most part, the industry is in some pretty strong hands, he noted. “There's a lot more equity in the industry than there has been in the past few years.”