You won't find these five piling into the usual property stocks. By Jeffrey R. Kosnett, Senior Editor December 31, 2007 After prodigious gains in the first seven years of this century, real estate stocks finally retreated in 2007. Through mid November, the Dow Jones Wilshire index of real estate investment trusts lost 15% and the average realty-oriented mutual fund dropped 10%. Lofty property values, growing worries about the health of the economy and the concern that long-term interest rates would soar contributed to falling share prices.But all is not hopeless. The best opportunities in the coming year will be in less-traditional real estate securities, which performed well in 2007. These include foreign real estate stocks and U.S. companies with holdings, such as warehouses and indus-trial parks, that the market hasn't recognized. You won't find these kinds of stocks in traditional real estate funds, which usually focus on large domestic office and retail REITs. We've identified five funds that have the freedom to dig into obscure niches. All are run by clever, experienced managers and would fit nicely into the 5% to 10% of your portfolio that's devoted to real estate investments. Alpine International (symbol EGLRX; 888-785-5578). Sam Lieber, who has been investing in real estate stocks since 1985, loads up on curiosities such as Norwegian hotels and Brazilian homebuilders. With a strong emphasis on Brazil, India, Thailand and the like, Alpine has the feel of an emerging-markets fund. That could explain the fund's 31% annualized return over the past five years to November 12 (it was up 10% in 2007). CGM Realty (CGMRX; 800--345-4048). To say that Ken Heebner (our cover subject this month; see Heebner's World View) defines real estate liberally is an understatement. He's made big money in the past on REITs and homebuilders, but he's also willing to invest in mining companies and fertilizer producers. So it's best not to view CGM Realty as a traditional real estate fund but to consider it a growth vehicle run by one of the smartest investors on the planet. CGM gained 36% in 2007 and returned 42% annualized over five years. Advertisement Cohen & Steers Asia-Pacific Realty Shares A (APFAX; 800-330-7348). Asia-Pacific, the sole commission-charging fund on our list (with a 4.5% sales charge for Class A shares), is the only purely Asian real estate fund. The fund has one-third of its assets in Japanese stocks, which is good because Japan is recovering from a real estate depression. It holds little in China, which is better because Chinese real estate stocks are vastly overpriced, trading for 50% above the net asset value of the properties. The fund, which launched in July 2006, gained 17% in 2007. Fidelity International Real Estate (FIREX; 800-544-6666). Steve Buller invests mostly in the largest REITs outside the U.S. Buller, who also runs Fidelity's domestic REIT fund, has big positions in such giants as Mitsubishi Estate and British Land, the largest REITs in Japan and England. The fund lost 3% in '07 but gained 21% annualized over the past three years. Third Avenue Real Estate Value (TAREX; 800-443-1021). Bargain-hunting manager Michael Winer went more global in 2007, saying he saw better opportunities in foreign property than in the U.S. market. He was right, so the fund did much better than most nominally domestic real estate funds. At last report, Third Avenue's assets were evenly split between U.S. and foreign stocks. The fund lost 6% in '07 but gained 21% annualized over the past five years.