GLOBAL - The historical six-month time lag between direct and listed real estate markets was more than halved in some countries in 2009, according to Cohen & Steers.

In its latest research paper published by the European Public Real Estate Association (EPRA), the US investment firm found the UK and US direct markets lagged the listed by sector by two months and three months, respectively.

The listed sector has led the direct markets on average by six months in the past, offering investors a leading indicator and opportunities to arbitrage between the two.

But the lag was significantly shortened in 2009, which Cohen & Steers attributed to the impact of unprecedented and unorthodox government interventions in the financial markets, such as very low interest rates, quantitative easing or more direct market measures.

The interventions prevented wide-scale direct real estate foreclosures and forced sales that were initially implied in listed real estate pricing, the report said.

It added: "Had there been no intervention, the direct property markets would likely have experienced a much deeper downturn as originally implied by the listed markets."

The findings have implications for investors who rely on listed markets' forward indication of direct real estate pricing.

The report said: "2009 was unprecedented in many regards, particularly with respect to government intervention.

"Even with the shorter lag, by mid-2009, direct investors with one eye on the listed property market were given a strong hint as to the direction of future property values."

Scott Crowe, global portfolio manager at Cohen & Steers, and co-author of the report, said:

"Our study not only provides evidence listed property markets lead direct property markets, but also adds to a mounting body of research that supports the idea real estate stocks behave like real estate, not general equities, over the medium to long term.

"Yet they still offer investors better transparency and more liquidity."