New York-based Cohen & Steers has seeded a pair of onshore and offshore long/short real estate hedge funds to take advantage of the hemorrhaging global real estate market.

The firm’s $25 million Global Real Estate Long-Short Funds focus on publicly-traded real estate securities. The funds seek real estate or real estate-related investments with attractive valuations, strong balance sheets, strong management teams and attractive business models for its long portfolio, according to fund documents. Their shorts include both opportunistic catalyst shorts and hedges against certain market risks through short positions and through the use of financial derivative instruments.

The firm said it expects U.S. real estate investment trusts to generate earnings growth of 4% to 6% this year and in 2009, with demand and supply for commercial real estate remaining largely in balance.

“With REITs continuing to trade at historically greater-than-average discounts to NAV, we view them as attractive, given their moderate growth, relatively stable earnings and compelling yields,” it said.

In Asia, the firm said it believes that Japanese developers’ stocks and certain Japanese REITs offer attractive valuations, while it remains generally cautious toward Singapore and Australia.

Across the pond, the firm said U.K. property fundamentals are trending down, as evidenced by landlords offering incentives to tenants, and are not likely to rebound in the near term.

“Global companies we favor in this environment include retail property companies, which typically have inflation pass-through provisions in their leases, and self storage companies, whose short-term leases allow for frequent mark-to-market rent increases,” it said.