Once a year, the Urban Land Institute asks more than 600 of the country's largest real estate investors, developers one key question: Where are the best opportunities in real estate for the year ahead?

This year's answers have just been compiled and here's a quick overview of some of the investment advice:

Buy residential lots, especially in boom- to- bust markets where population growth will inevitably lead to future demand. "The market collapse (has) maul(ed) builders," says the Institute's "Emerging Trends" report for 2009. With loads of unsold housing inventory gushing red ink, many builders are dumping their land holdings, hoping to raise quick cash. "Prices are (just) cents on the dollar," according to the study, "but investors must be prepared to hold (the land) for awhile" until local demand returns.

Get involved in multifamily rentals if you are not already. Well-located apartment properties are positioned to do well in the emerging softer, post-boom economic climate. People who've lost houses to short sales and foreclosures need to rent … and they're pushing up demand in many areas. Aging baby boomers looking to downsize from their former suburban lifestyles also are opting to rent - at least for the time being -- rather than gamble on buying a replacement home in an unsettled market. Add in the children of the boomers who are forming new households but can't afford to buy, and you've got a substantial base for more rentals in the next couple of years.

While U.S. markets soften in the next several quarters, check out opportunities up north in Canada. The banking system in Canada is solid and conservative, never participated in a major way in the subprime mess to the south. Cities like Vancouver in British Columbia and the "red hot" energy centers of Calgary and Edmonton could offer attractive returns for American investors who take the time to understand their underlying market dynamics.

Neighborhood-oriented, smaller retail centers in the U.S. should perform well for investors in the coming downturn, according to the study, provided they have strong grocery anchors and drug stores that serve the human basics that persist through any economic downcycle.

For small investors who want to keep it simple, the study suggests they look hard at equity real estate investment trusts -- REITs. Because of the overall stock market declines, many REIT prices are now undervalued yet carry solid dividends. The best of the REITs are well capitalized, well managed, have moderate debt loads and should perform well even in a soft economy, according to the study.

Published: October 24, 2008

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.