Not sure how you come up with this opinion? Care to elaborate?
Sure things are bad, there's no credit, but entry prices are also very low. I've made excellent money this year on commercial property funds (asset value currently up 29% since Jan even after the recent pull back): better than my other share investments in fact. They are also yielding 6-8% dividend [I've posted here often enough on my view of the importance of cash generation and dividends]. Capital gain was all about timing, dividends are ongoing and "locked in" at a higher rate as I bought at such low prices. Everyone else was heading for the exits whilst I was buying. My bank has also recently uprated commercial property to be 10% of their model portfolio from 0% or 5% earlier this year, so I'm not alone in thinking this.
I guess the "buy to let of residential property on a small 10% deposit and then lever up 9:1" model may indeed be dead as there's no cheap credit available, but that doesn't mean that all property investment is off limits for a decade IMVHO.
I refer to residential where globally yields are still too low to signify a market bottom. There are very few places where you can get 8%+ in residential to justify the fees, maintenance, legal and basic hassle.
Commercial is a different issue. REITS and other commercial funds fell 40%+ and well ahead of the residential markets globally. So yes I agree in part if you are going to invest in property commercial is the way forward and only place where value can be found (you still need to look as its not all cheap globally!).
I still would want 8%+ yield to signify a real market bottom. 6% is still overvalued I feel.
Asia is the place to buy commercial now I think. Singapore or HK take my fancy. In Europe then Germany is dirt cheap on a valuation basis. Know much about Speymill Deutsche? been on my radar for a while. Wish I had bought 6 months ago at 10c a share!
It is worth having 5-10% of net worth in commercial if only as an inflation hedge. Likewise 5-10% in other 'Real' assets such as commodities and infrastructure too. El-Erin in 'When Markets Collide' sets out this interesting portfolio allocation for the 'new normal' we are living in.
I stick by my view that residential globally hasn't bottomed in 90% of countries (including the USA which fell first), yields are still too low, and price to earnings still too high.
Residential property investment will be seen as yesterday's investment fairly soon.
The future money is to be made in other assets namely Asian equities and commodities.
Why housing is not coming back-
http://www.oftwominds.com/blogapr09/housing-not-coming-back04-09.html
I agree with your view on dividends. Peter Schiff (an economic legend) writes a lot about the importance of dividends over capital. He states that property or shares capital value can be wiped out. I.e the tech stock bust or current property bust.
He states that you should buy an asset on the basis of its return every year. So for property it needs a good retal return and for shares a good dividend payment.
His point is that capital can fall or rise massively and is often not based upon fundamental economic drivers but market sentiment and exuberance.
Dividend/rents are more stable than capital moves (up or down) and are the basis of what your invested capital should buy. the return per year is what your investment into the asset should earn. Any capital appreciation should be seen as an added bonus and not be the main reason for the initial purchase.