CORRECTED - CORRECTED-Reuters Summit-Australand focus on lower-end housing

(Corrects paragraph 6 to say Sydney and Melbourne, not Brisbane, will perform strongly)

* Australand to focus on lower end of housing market

* Lower end may outperform high end

* Sees a pick up in logistics by March 2010 (For other news from the Reuters Global Real Estate Summit, click: here)

By Eriko Amaha

SYDNEY, June 22 (Reuters) - Australian property trust Australand Property Group (ALZ.AX) will remain focused on the lower end of the housing market as pent-up demand and government grants may help this segment outperform the high-end, a company executive said.

Australand, a unit of Singapore's Capitaland (CATL.SI) which generates a third of its revenues from residential development, has benefited from an increase in the government's first home owner grants as part of a stimulus package.

Although the grants are expected to expire in September, Australand plans to target that segment because it expects the market is likely to stay firm.

"We think the more affordable end of the market will be the area that performs best over the next 12-18 months," Bob Johnston, managing director for Australand, said on Monday at the Reuters GlobalReal Estate Summit in Sydney.

The upper end of the residential market, on the other hand, will remain under pressure over the next couple of years, he added.

Sydney and Melbourne will likely perform strongly, offsetting part of any slowdowns in other states, he said.

"What you are seeing is there is some of the pent-up demand and there will be continued demand even beyond when the grants phase down to the original levels," he said.

Australand hopes to make profits on the lower end of the housing market with volume, although it has no intention to boost residential investment and will keep a prudent approach to its capital management, Johnston added.

The company last week announced it expects to finalise talks with syndicate banks to extend a $950 million debt facility to June 2011 from June 2010.

Investors seem to have welcomed Australand's handling of its debt, pushing up the stock by 50 percent so far this year, compared with a 19 percent drop in the A-REIT index .AXPJ.

Australand allocates half its portfolio in the warehouses and industrial markets, and Johnston sees these sectors remaining under pressure this year as the nation's economy slows.

Capital values for office buildings and industrial are likely to fall 25-30 percent from their March 2008 peak to an expected trough by March 2010, according to Jones Lang LaSalle.

Johnston expects the logistics market to start recovering by the end of the 2010 first quarter, although the office sector may lag further.

"The good thing about industrial is you can turn the supply off very quickly," he said.

(For summit blog: blogs.reuters.com/summits/) (Editing by Saeed Azhar))