We Americans live in interesting times. On the one hand, our new Camelot-like president has raised the hopes of millions. On the other hand, we’re in the most challenging economic environment of our generation. Two victims of the meltdown have been real estate and the dollar: real estate because of all the overvalued properties, the dollar because of government spending.

This may lead you to disregard any investment containing the words “real” and “estate.” It may also lead you to think all investments are bad right now. Yet while the real estate market is suffering here, there can still be opportunity abroad.

Broad-based international real estate ETFs could continue to do well despite the stateside economic situation. iShares FTSE EPRA/NAREIT Developed Real Estate ex-US (IFGL) & SPDR Dow Jones Wilshire International Real Estate (RWX) are the most actively traded and both have done very well over the last several weeks.

International real estate has been spurred on by the emerging markets. Claymore/AlphaShares China Real Estate ETF (TAO) sits atop our current All Star Investor sector rankings, partly because of China’s recent decision to relax commercial financing requirements. Before the regulation change, Chinese developers had to front 35% cash before financing was approved. Now banks only require 20% down. This change should spur more development in the world’s fastest-growing economy.

Dividends are also attractive in real estate funds. Granted, you’ve had to endure shell-shock from declining share prices in recent years. But people still need a place to sleep – and businesses still need a place to conduct business – even overseas. Rents keep investors happy. In addition, international real estate is not priced in dollars. Even if international real estate stagnates, ETFs like IFGL and RWX could still appreciate as the dollar falls.

Like many other sectors, international real estate found a bottom in early March. Since then, it’s been on a tear up the charts. One reason we’re highlighting this sector is the recent breakout above resistance. You’ll notice that the chart has several gaps. International ETF opening prices reflect the fluctuations while the US market is closed – so don’t draw too many conclusions from the price gaps.

IFGL 6-Month Chart

There are currently seven international real estate ETFs. Those mentioned above have the best trading volume and liquidity. Other possibilities are iShares FTSE EPRA/NAREIT Asia (IFAS) and iShares FTSE EPRA/NAREIT Europe (IFEU), both of which focus on specific geographical areas while iShares S&P Developed ex-US Property (WPS) and WisdomTree International Real Estate (DRW) have broad international exposure.