While the Lucky Country didn’t rate as one of the best nations for capital growth, it was ranked by foreign investors as the fifth-best country for stable and secure real estate investments.

It came in behind the United States, Germany and Canada in the 26th annual member survey conducted by the Association of Foreign Investors in Real Estate (AFIRE).

Australia, which dropped from its fourth-place 2017 ranking, was also overtaken by Britain, with investors less worried than they had been about Brexit’s impact on the economic market. This also led to London replacing New York as the number one city for real estate investment, according to AFIRE chairman Edward Casal.

“A year later, foreign investors are less concerned about the ramifications of Brexit,” Mr Casal said. “At the same time, the London market has been buoyed by several large sales over the last year.

“London has a number of attributes as a location for investment, including a stable rule of law, transparency, and use of the English language. In addition, a favourable time zone for international business, deep labour pool and cultural attributes also help.”

AFIRE members, who are among the largest institutional real estate investors in the world – estimated to have more than $2 trillion in real estate assets under management – ranked New York as the second-best city to invest in.

Los Angeles also made the top five, as did two German cities – a first for the survey – with Berlin coming in third and Frankfurt fifth.

BIS Oxford Economics senior manager Angie Zigomanis suspected Brexit was also a major factor in growing investor interest in Frankfurt, which was ranked 13th last year.

“If a lot of big financial groups are looking to move to Europe, to relocate from Britain, investors are picking spots where they’re likely to go. Frankfurt, the financial capital of Germany is a main option.”

Closer to home, Sydney tied with Shanghai for the title of eighth-best city for real estate investment, down from its seventh-spot ranking in 2017, which it shared with Boston, Madrid and Singapore.

Mr Zigomanis said it wasn’t surprising that Sydney and Australia has seen slight ranking slips, or that Australia had failed to rank among the top five countries for capital growth: the United States, Brazil, China, Spain and Britain.

It also failed to rank among the top countries for planned real estate investment in 2018, which were the US, Britain, Germany, Canada and France.

“Australia has had a very good run, it’s avoided recession for more than 25 years and seen very strong price growth in most property classes,” he said. “It’s not surprising that people are seeing better investment opportunities elsewhere.”

Australia is also well behind countries such as the US and Britain when it comes to the multi-family or build-to-rent sector – which sees institutional investors build and then rent out properties, instead of selling them. This was the second-most popular property type to invest in in the US, the survey found, after industrial property.

However Mr Zigomanis said Australia’s political and economic stability, would continue to lure foreign investment.

“Investors have to balance risk and potential for strong growth. Brazil [the number one emerging country considered by surveyed investors] is a good example – strong growth is expected on the upside, but on the flipside it’s a bigger risk to invest there.”

“Australia’s not somewhere where a change of government results in massive changes to policy on foreign investment in property.”

Interest rate risks, high valuations, oversupply in some markets and of some property types were among concerns cited by the foreign investors surveyed. They were also concerned that economic and political missteps could trigger an economic slowdown affecting the real estate market.