Overseas investors are targeting the West Midlands for key development opportunities rather than pay over the odds for London properties, a new survey reveals.

The region is pulling in more real estate investment as optimism returns to the sector following the turmoil of the downturn, according to real estate experts at PwC.

A new report, entitled Emerging Trends in Real Estate® Europe 2013, published jointly by the Urban Land Institute (ULI) and PwC, reveals that real estate developers and investors across Europe are feeling relatively more optimistic about the future.

Many are on the lookout for investment opportunities and the UK is proving to be an attractive prospect. But 54 per cent of investors now think that London property is overpriced, causing investor interest to spill out to regions like the West Midlands.

Alistair Reason, PwC’s Midlands-based real estate expert, said: “Real estate investors have taken comfort from the fact that they have survived the turmoil of the past few years and are now turning their attention to the best bets for future investment.

“There are many reasons to be cheerful for those with access to capital and debt.

“These businesses are well placed to take advantage of the opportunities that exist in the UK marketplace and, specifically, here in the West Midlands.

“As the London market shows signs of overheating, we have noticed an upturn in interest from inbound investors, including some from the US, who are buying up Midlands-based stock, which is currently held by property holding companies and banks.”

Among the most optimistic real estate investors are businesses with asset management expertise, who believe they will be able to capitalise on the value-added opportunities arising from the sale of distressed assets.

The most pessimistic on their prospects for 2013 are lenders, who continue to be saddled with significant numbers of difficult assets with minimal appeal to potential investors.