London continues to attract significant attention from foreign buyers and last year the City retained the crown as Europe’s leading real estate investment market, taking 23 per cent of the entire European capital flow.

This is the highest yearly total ever seen in Europe for a single city. Middle East investors were responsible for almost a fifth of that figure. Seventeen per cent, or 5.4 billion euros, of London’s commercial real estate investment originated in the Middle East, up from 7 per cent from 2012.

With such a large proportion of its commercial real estate owned by investors from one region, is London leaving itself exposed — and can it last?

Such is the strength of demand that supply is struggling to keep up. So there is an expectation that this demand will increasingly spread out of London to other UK cities.

At the moment however London is the only UK city to appear in CBRE’s Top Ten European Cities for investment, while Germany boasts five. This is however more a reflection of city scale.

Last year’s figures also show a resurgence of investment in commercial real estate in Spain, Ireland and Portugal — countries with recovering economies and attractive pricing. In a recent CBRE survey of investor intentions, Madrid is now second only to London, perhaps reflecting the easing of concerns surrounding the Eurozone debt crisis.

With potential for high returns and cheaper property in the ‘recovery markets’, will London’s Middle Eastern friends now start looking elsewhere to invest their cash?

London does of course have a unique spot in the market. It is the English-speaking capital of the EU and its economy grew faster in Q4 of 2013 than any other major European economy (0.7 per cent against Germany’s 0.4 per cent and France’s 0.3 per cent).

The UK’s currency independence outside of the Eurozone and the current Government’s austerity measures appear to have led the country back to strong (by European standards) sustainable growth.

Real estate is a key contributor to this growth. Despite austerity, London has still managed to invest in major real estate and infrastructure projects. The Capital’s Crossrail link has pressed ahead and the nation’s rail infrastructure is set to be revolutionised with the new H2 high-speed network linking London to Manchester.

The British government has earmarked a total of more than $400 billion worth of investment in energy, transport, utilities and communications.

Despite London’s apparent prowess, its success in 2013 did not happen in isolation. The total volume of investment in Europe’s commercial real estate grew by 30 per cent last year with a Q4 total of nearly 61 billion euros.

The recovering markets of Portugal, Italy, Ireland and Spain saw a particularly strong upturn with investments more than double than 2012, reaching 11.8 billion euros. Greece has also bounced back seeing transaction volumes grow by more than 1,000 per cent.

This marks the first year of growth in these markets since 2007. These figures indicate that the world’s investors are growing in confidence as these markets continue to recover.

Outside of London, Middle Eastern investors spread their capital across the continent, namely in Dusseldorf and Paris and to a growing extent some of the recovering southern European markets, as well as Russia.

Both Middle Eastern and Asian investors recorded their highest ever annual total of European real estate investment with nearly 10 billion euros ($13.75 billion) worth of transactions each in 2013.

Returning to London, the residential markets are playing an increasingly important role in attracting new capital. Several off-plan developments are seeing investment from across the Middle East, including resident expats who cherish the liquidity, legal transparency and relative ease and security of the letting market.

Such is this trend that the marketing of London scheme, particularly in Dubai, is now common.

Above all, London is like Dubai. It is a cosmopolitan city where people from different backgrounds and cultures coexist harmoniously, making it an ideal place to live, work and invest securely.

The cities also have the benefit of providing strong returns and so the expectation is that they will continue to attract a disproportionately high level of investment into the future.

For London I don’t see it losing its place as the largest and single most important European real estate market.

— The writer is managing director at CBRE Middle East Region.