Many home developers are reducing prices and global real estate, along with related exchange traded funds (ETFs), may start to attract more home buyers.

Financing is tight and European developers are responding to a smaller pool of buyers by cutting prices to unload their holdings, reports Mark Scott for Business Week.

Home prices are experiencing steep drops and foreign currencies are now depreciating. Properties in emerging markets may cost as little as an eighth of the average U.S. home and these countries also have the potential for healthy economic growth.

But world banks still charge premium interest rates and require large down payments that could deter some potential buyers. Some analysts project real estate to further depreciate in 2010.

Market watchers suggest looking at properties in countries with good long-term growth. It is also advised that buyers should get financing from multinational banks to limit chances of domestic financial problems. It is also noted that places with steady rental income from tourists have less risk than places that rely on local tenants.

• iShares FTSE EPRA/NAREIT Developed EU Index (IFEU): down 6.7% year-to-date

Max Chen contributed to this article.

Tags: Europe, Global ETFs, IFEU, Real Estate, REITs, Sector ETFs