London has overtaken New York to become the top global city for real estate investment for the first time since 2009, according to a new survey by the Association of Foreign Investors in Real Estate.

London has overtaken New York to become the top global city for real estate investment for the first time since 2009, according to a new survey by the Association of Foreign Investors in Real Estate.

The survey was taken among AFIRE member firms, which have an estimated $2 trillion or more in real estate assets under management globally.

The UK capital was voted for by 24 per cent of respondents, rising from second place last year to become the only non-US city in the top five. New York was in second place, followed by San Francisco, Houston and Los Angeles. Tokyo took the sixth spot and Madrid, Munich, Paris and Washington DC made up the rest of the top ten.

"Our members' increasing interest in cities beyond the powerhouses of New York, Washington and San Francisco points to the recognition of additional investment opportunities for foreign investors," said James Fetgatter, chief executive of AFIRE.

The survey will add to fears of a renewed housing bubble in the South East as a result of rising house prices from increased foreign investment.

Despite the growth rate in house prices in London's prime locations showing signs of slowing down last year, global real estate firm Knight Frank reported a rise in prime central London locations of 7.5 per cent for 2013.

Meanwhile, according to UK-based property investment manager Savills, £7 billion ($11.5 billion) was spent by foreign investors on property in prime London locations in 2013.

In the 2013 Autumn Statement, UK finance minister George Osborne unveiled plans to charge non-resident owners of UK homes with a new Capital Gains Tax when they sell their property as part of a crackdown to prevent further increases in UK house prices.

US Remains Strong

AFIRE said that the US remained the strongest investment market among foreign investors.

According to the survey, the US remains the most stable and secure country for real estate investment by over 50 percentage points over the second country, Germany, the widest margin since 2006. The third most stable country was the UK, followed by Canada and Australia.

The survey said that the US also provided the best opportunity for capital appreciation, with 47 per cent of repondents voting for it, while Spain was in second place, receiving 21 per cent of the votes, up from fifth place last year.

While the US remains the primary target for foreign investment, 69 per cent of survey respondents predict they would also have modest to major net increases in their European portfolio.

The US also leads the rankings for planned real estate acquisitions in 2014 with 48 per cent of respondents predicting a modest increase in their US portfolio size and 20 per cent saying there would be a major increase. No respondents predicted a major net decrease.

Investors are extremely positive about the direction of the US real estate market. When asked how their perspective on the US real estate market had changed since the beginning of 2013, 65 per cent said it had remained the same, while 30 per cent said it was more optimistic.