London 'best city for foreign property investment opportunities'

London has been named the city with the best real estate investment opportunities for foreign investors, overtaking last year’s first choice New York.

The capital rose from the second spot last year, and was the only non-US city listed in the top five for investment opportunities, according to a survey by the Association of Foreign Investors in Real Estate (AFIRE).

New York, San Francisco, Houston and Los Angeles make up the rest of the top cities for foreign investment in 2013.

Chief Executive of AFIRE James Fetgatter said the survey reflected the international views of its members, which come from 21 countries.

He said: “It’s very easy to invest in London, there are no restrictions, the tax regime is good for foreign investors. And it’s an international city so it attracts a lot of European, a lot of Middle Eastern and Asian money.”

The survey results will add to fears of a south-east housing bubble, with foreign investment helping to cause a rise in the capital’s housing prices.

According to Savills, more than £7bn of foreign investment was spent on high-end London homes last year, while data from the Office of National Statistics (ONS) shows that London house prices increased by twelve per cent in the twelve months to October 2013.

In the 2013 Autumn Statement, Chancellor George Osborne announced that although Britain “welcomes investment from all over the world”, he would start charging non-resident owners of UK homes Capital Gains Tax when they sell properties.

The tax is expected to help prevent further dramatic increases in top-end house prices and will come into effect from April 2015.

According to AFIRE, London has not been chosen as investors’ best city for real estate investment opportunities since 2009.

But US property overall remains the most stable and secure country choice, with more than 50 percentage points over second-place Germany. The US real estate market also remains the best opportunity for capital appreciation.

The UK was named as the third most stable and secure country for foreign investment, up from fifth place last year.