The last quarter in the U.S. property market has been marked by increased demand for office, retail and related commercial real estate. This development is based on the indicators of economy, employment rate, occupancy, and rental rates. And the trend is expected to continue in 2014.One area from the investor's perspective is that of real estate mutual funds. Until now, real estate equity funds have garnered an average return of 1.93%. The return on funds in the coming year is now largely dependent on interest rates and whether or not there is a surge.Mr. Lippman, a staff reporter for the WSJ based in New York, is also against giving up on mutual funds. He says that investors are looking at the big picture; the economy is slowly recovering, and this is going to ultimately benefit real estate owners.The ‘figure' analysisOn a positive note, returns are 6.1% up from last year. Real estate investment trusts (REITs) are looking fair based on number crunching analysis. In an investment report featured by Elika Real Estate, the progress within New York has been highlighted in the third quarter. Residential sales were $11.3 billion, which marks a 31% increase from last year's third quarter.Another supportive trend can be seen with overseas funds being poured into Miami Real Estate. According to data from the Commerce Department, the area is seeing unprecedented demand for residential property. There has been a 15% increase in multi-family permits indicating broad spectrum investment in the area.Based on these numbers, real estate funds represent a buying opportunity for investors. This is significant because the market has already predicted a further rise in interest rates.Apart from the numbers story, investors also need to compare positive growth trends versus the rise in interest rates.Since the speculation of tapering the Federal quantitative easing program, yield on 10 year treasury funds increased from 1.63% in May to 3% in September. However, the Fed is expected to continue its easing program till March next year.Growth trends to look out forThe current scenario means that the market is ripe for investors looking to diversify their portfolios with holdings that are not linked with performance of the stock market.Another important growth trend to bring into consideration is the commercial real estate outlook. Based on analysis from the National Association of Realtors, vacancy rate for commercial property is expected to decline. The average rent is expected to increase for both retail and industrial property, indicating cash flow to the market.From the REIT perspective, funds that own properties such as hotels and apartment tend to be more flexible in nature. This allows investors to earn more, while also enjoying stable cash flows. Property owners who have more flexibility to adjust pricing are in a better position to adapt to market trends and interest rates.