UNITED STATES- ING Clarion Partners believes any pension funds in the United States are going to be taking a very cautious approach to investing in real estate this year.

According to the real estate manager's annual report, entitled US View April 2008 Real Estate Investment: Finding Value in a Changing Market, much of the capital earmarked for investment is now sitting on the sidelines.

David Lynn, managing director of research and investment strategy for the company, said one of the big factors affecting funds such as ING Clarion is many investors are not sure where assets should be priced, and this has caused many investors to be careful on how they either buying or selling real estate.

"At the beginning of the year we had planned on making $5bn (€3bn) worth of real estate investments on a global basis. With the slowdown happening in the US markets, it's highly unlikely we will reach this figure by year-end. The number of transactions that have been completed market wide this year in the United States have fallen off a cliff when compared to last year."

ING Clarion believes in general terms real estate market fundamentals are still pretty strong, he main reason being in the last boom period there were not a tremendous amount of new development projects, which in turn has kept occupancies at a workable level.

Lynn thinks retail properties are going to be the worst affected of any of the major property types.

"There is going to be a lot of financial pressure on the consumer.  There will be less discretionary income available with the increased gas prices and the problems with single-family housing. Published reports have consumer sentiment at a 26-year low. This will not change until sometime next year."

That said, the property thought to be least affected is industrial assets, as Lynn added: "The import and export business will still be going very strong. This should keep industrial properties involved with these industries doing very well."

One area for new opportunities, gaining wider public momentum, is in structured finance, and Lynn notes: "It's our opinion there will be some strong investment plays in mezzanine and CMBS kind of investing. Many sources of capital for these kinds of deals are now out of the market. This will create some new opportunities for investors."