New York has come ahead of London as the most attractive city for wealthy investors and residents, as the UK capital has suffered from rising taxes and more hostile regulatory climate for expats, according to the 2010 Wealth Report by Citi Private Bank and Knight Frank, the real estate firm.

The value of property owned by wealthy individuals globally last year fell in three-quarters of the 56 locations tracked.

"The UK's capital has suffered more than many financial centres and there is growing concern among the footloose international elite over threats to the previously stable tax environment,” Liam Bailey, head of research at Knight Frank, said.

New York took the top slot in the report's rankings, with London second, followed by Paris and Tokyo.

The fortunes of London as an international financial centre have waned relatively in recent years. Earlier in the noughties, London benefited from the boom in hedge funds and private equity and its relatively low tax regime for non-domiciled residents, while New York was seen to have suffered because of the regulatory crackdown after scandals at Enron, WorldCom and other firms.

Property accounts for one-third of the investment portfolios of wealthy investors, according to the survey. More than 70 per cent of investors believe this year will be a good year to invest in property, with half predicting residential property will be the sector's top performer.