By Daryl Loo

LONDON (Reuters) - U.S. fund manager Franklin Templeton sees better value from buying land in Britain rather than existing properties, as rents in UK could tumble for the next five years, its head of property told Reuters.

It also wants to invest in China real estate investment trusts (REITs), but does not expect a listing for at least another year due to delays by regulators, Jack Foster, head of Franklin Templeton Real Estate Advisors (FTREA), said.

FTREA, which has $4 billion (2.4 billion pounds) in assets under management, now has about $1 billion available to invest and last month took a stake in an opportunity fund eyeing UK land, its first investment since May 2008, New York-based Foster said.

"The view is that over the next three to five years, any existing building that you buy will have declining rents, so we're not sure if significant returns can be made there," Foster said in an interview.

Opportunistic investors are raising billions of euros in anticipation of deeply discounted bank property sales, but many European banks have said they will give struggling customers leeway to work out the loans rather than foreclose on assets.

"Banks are not foreclosing and selling distressed portfolios, but are willing to let land assets go because banks can't do anything with them ... land values are low with no prospects of rising and produce no income," Foster said.

"You basically want to get your land for free now ... there's not a lot of upside and you're not going to build on it any time soon," he said.

He declined to give details about FTREA's latest UK investment, but said FTREA prefers to put its money with funds of between $500 million to $750 million in size, and tends to invest up to $150 million each time.