Widespread redevelopment within the city centre and along the harbour-side for the recent America's cup has led Valencia to become Spain's property hotpost, experts have stated.

While property prices in the capital Madrid and in Barcelona have leveled out recently, house prices in Spain's third largest city are continuing to grow slowly but steadily, the local real estate agency Valencia Property stated.

In particular, the refurbished old centre is becoming increasingly attractive to foreign buyers keen to get away from the ex-pat communities along the southern coast of Spain.

"In Valencia people are generally looking inland to areas north-west of the city or south-west of the city," said Graham Hunt, a spokesman for the firm.

"There are good facilities with regards shopping, nice towns and things like that, but people are generally buying outside the towns, they're buying houses in the country."

The growing number of cheap flights between the UK and Valencia is also a factor in making the region an attractive option for investors and the news that Ryanair is to open a new operating hub there means that future growth looks guaranteed.

According to a recent survey of UK independent financial advisors carried out by Baydonhill, three in ten have seen an increase in overseas property business over the last 12 months, with Spain, Portugal, Italy and France remaining the top destinations for those buying abroad.