Anthony Bolton, the veteran fund manager at Fidelity International, is calling the bottom for property stocks and looking hard at buying into housebuilders and retail companies.

Speaking to investors today at the annual meeting of his £400 million Fidelity Special Values fund, Mr Bolton said that he had bought into a number of well-known UK property stocks in recent months.

Mr Bolton steps down from running both the Special Values Fund and Fidelity's flagship £3 billion Special Situations Fund at the end of the month. He held a large weighting in property last year before the introduction of UK Real Estate Investment Trusts from January 1, 2007, but sold his funds' property exposure earlier this year.

The share prices of Britain's six largest property Reits — British Land, Land Securities, Hammerson, Liberty International, Segro and Brixton — have fallen on average by 45 per cent since January.

"Now with share prices falling, I've started to add back into this area," Mr Bolton told investors at today's annual meeting of the Fidelity Special Values fund.

Housebuilding stocks have on average halved since peaks hit between February and April this year, reflecting fears that the housing market is set to crash.

While house price inflation has ground to a halt and sales volumes for the big firms have fallen between 10 per cent and 17 per cent since October, there are no signs yet that housebuilders will need to cut asking prices.

The sharp decline in quoted property stocks reflect fears that companies' underlying building assets were over-valued. The increase in the the cost of debt since January has caused the bottom to fall out of the investor market but the rental market across offices, retail and industrial has held up.

Mr Bolton added: "It discounts a big drop in property values, and in some areas it overdiscounts that."

Prices of individual shops and offices have fallen between 15 per cent and at worst 20 per cent since the peak in June, judging by the thin volume of transactions that have managed to complete since the onset of the credit crunch in August. But price falls of individual assets are far shallower than the declines marked down on property stocks.

Property stocks are trading at discounts of 30 per cent to 50 per cent of their latest net asset per share valuations (NAV) — a core way of measuring the underlying worth of a property stock. Property companies are expected to write down their NAVs by up to 10 per cent over the coming months. If, as experts increasingly predict, those writedowns mark the bottom of the market, property stocks may look over-sold today. Mr Bolton is buying on that assumption.

Housebuilders were trading at the start of the year on multiples of between 1.5 and 2 times their NAV but are now trading around par. Barratt Developments bought Wilson Bowden in February for £2.2 billion, equivalent to 1.9 times NAV including goodwill and valuing the enlarged group at £4.8 billion. Barratt today has a market value of just £1.67 billion and this week fell out of the FTSE100 index.

Retailing stocks have been hit hard on fears that a fall in the housing market will trigger a drop in consumer spending. Travis Perkins, the owner of the Wickes DIY chain, yesterday gave warning of a "sharp moderation" in its sales growth over the coming months despite enjoying strong like-for-like sales growth across the group for the whole of this year.

Mr Bolton has run both Fidelity Special Values and Fidelity's flagship £3 billion Special Situations Fund since 1979, delivering annualised returns of 20 per cent. Sanjeev Shah will take over the Special Situations Fund.

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