Britain is now the fourth best place in the world to invest in residential property.

Research by Savills shows that Britain is now ranked behind only the USA, the United Arab Emirates and Singapore as the most appealing place on the planet for those seeking a return on rents.

The Savills World Residential Investability Ranking gives countries a rating on the basis of broad economic and demographic factors. It ranks the USA a clear number one for investability on the basis of economic growth and market recovery potential.

However, local factors need to be taken into account, says Savills, and Britain’s housing supply shortage is making the country attractive to potential investors.

Country investability, based on economic performance and growth prospects alongside growing population, is behind Savills’ ranking of the UK in 4^th place.

Yolande Barnes, director of Savills world research, said: “It is vital that investors understand the long-term demographic, economic and supply-side drivers of demand – and therefore sustainable value – when making investment decisions. These can be different at national and local level.

“When a growing population, growing affluence and limited housing or land supply converge, we would anticipate real house price growth.

“The absence of one or more of these variables can stall a housing market and the absence of two or more can send property values downward.”