The super rich investors credited with pushing up prices in London are now looking to California as the US real estate market starts to turn around, it is claimed.

Wealthy European and Asian investors who have dominated the market for addresses in London's most fashionable neighbourhoods are frequently outbidding locals for assets in the Golden State, according to real estate agents.

‘It is now London and Los Angeles, not Shanghai or Moscow, that interests the cash rich international investor,’ said Simon Lyons, managing director of global property group Enstar Capital, who is making regular trips to the US in search of bargains.

As uncertainty stifles global financial markets, real estate with strong rental prospects in key cities across the United States is again becoming an asset of choice for the yield hungry international property investor.

Data released this week by the National Association of Realtors showed that international sales reached $82.4 billion in the year to March 31, up from $66.4 billion in 2011.

The Chinese are now the second largest foreign buyers of US homes behind Canadians, accounting for 11% of sales in the year to March 2012, up from 9% in the previous year.

To capitalise on increasing confidence, Los Angeles based asset manager TCW has unveiled plans to raise up to $250 million for a fund enabling wealthy investors to buy foreclosed homes from government agencies and lenders.

While lenders are still keen to avert foreclosures by extending loans, so called distressed inventory is starting to sell because banks are now in a better position to absorb greater losses and free up capacity on their balance sheets.

David Parnes, a director at Bond Street Partners, a Los Angeles based realtor specialising in high end luxury and investment property, said that Los Angeles is enjoying its biggest influx of foreign capital for years.

‘Investors are now snapping up foreclosures in greater numbers because comparatively low property prices mean they are able to achieve strong returns. Prices in L.A. are showing to 60 to 70% discounts against their equivalent in Manhattan,’ he told Reuters.

Parnes pointed out that there are many reasons to explain why the world's super rich are making a beeline for California. The state is the financial hub of the US West Coast, with Los Angeles already home to the highest number of foreign born billionaires and Fortune 500 company chief executives outside New York.

European ultra high net worth entrepreneurs active in Asia's fast growing economies are also acquiring bases on the US West Coast to benefit from reduced travel times to the region and time zones better suited to those business interests.

In Silicon Valley, Russian billionaire and Facebook backer Yuri Milner paid $100 million in March 2011 on one of the most expensive single family US homes ever sold. Moscow based Milner is expected to use the French Chateau style mansion as his second home, Parnes said.

Adam Fenner, an executive at California's Skyline Wilshire Investment Partners, which sources...