The report, called "the effects of the subprime crisis on commercial real estate markets," written by Dr. Lutz Luithlen and StratReal researchers, recommends that investors take a long view of their property investments and diversify the risks in their portfolios. The report also advises investors to look for properties with sound fundamentals and to avoid excessive leverage.

Although many experts disagree on their future predictions for capital markets, most experts remain fairly sanguine about the fundamentals of commercial property, this study finds, reporting that some trends can be safely anticipated. For example, there has been a rise in the cost of short-term debt, banks curtailing their lending, and a tightening of lending criteria. "We have also seen a growing aversion to risk among investors together with rising risk premia, as well as a clamoring for greater transparency and less complexity," according to the report. For property investors, that means a more critical eye toward valuations and the resale value of property, it says.

The report acknowledges that prime property will be more robust than property in secondary markets. However, there may be greater investment opportunities among secondary offerings.

The UK is likely to bear the brunt of the subprime shakeout, the report predicts. That is primarily because UK markets are ahead in the property cycle compared to other European markets and because the UK is the country with the most heavily leveraged property deals. The greatest reverberations of the subprime crisis, it notes, have been felt in the investment market. The shares of UK property companies have suffered severe falls, leading to discounts not seen since the early '90s. British Land, for example, was trading at a discount to net asset value of 46% in December, and Land Securities at 36%.

"Investors in director property ownership have good reasons to feel more comfortable than those in the property stocks," the report says, as they tend to hold property as a long-term asset, "the returns of which are anchored in long-leasehold agreements and therefore shielded from violent short-term market vibrations." New investors will find debt more expensive and loan standards more stringent, however, they are also likely to find property to be cheaper.

The report offers a "cautious guess" that "thanks to property's bond characteristics and its resilience in the shifting sands, it may well turn out to be a sanctuary in a turbulent world. We do not anticipate a flight from property. Property has not lost any of its value in contributing to a well-balanced portfolio."

That outcome is dependent on interest rates, space demands, investor appetites and the appeal of other investment vehicles, the report acknowledges. "However, what matters most in the long term is the economy, employment and consumer demand, all dependent on factors largely beyond the reach of governments and bankers alike."