Analysts report that the blockbuster rally in property stocks is beginning to sputter as investors grow increasingly concerned about such global events as the unrest in the Arab world and the recent earthquake and tsunami in Japan.

As of Tuesday’s close, the Dow Jones Equity All REIT Index had posted total returns of 4.6 percent for the year — an about-face from the last couple of years when REIT stocks routinely outpaced the overall stock market.

In the first quarter of 2009, investors began pouring cash into REIT stocks on account of their high dividends. Investors also reasoned that the values of commercial properties would gain as rents and occupancy levels climbed in the recession’s aftermath.

Now, however, more and more REIT investors are moving to the sidelines on concerns that global events could have a negative impact on future REIT profits. Hessam Nadji, managing director of research at Marcus & Millichap, says, “It’s not surprising to see this break in the outpacing of REITs” given the long run of past gains.”

It is interesting to note that hotel REITs were the biggest laggards in this year’s first quarter, posting returns of negative 1.24 percent. They were the top performers last year with gains of nearly 20 percent.

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