Melbourne and Sydney are currently presenting the best buying opportunities in the Australian office property sector, according to Australian Unity Investments head of property Martin Hession.
He said prime assets in the Sydney CBD and Melbourne CBD were moving back towards fair value territory post the global financial crisis.
Hession pointed out office markets throughout Australia were at varying stages in the cycle, with Melbourne and Adelaide leading the recovery from both a rent and yield perspective.
"Tight supply in these markets is creating favourable market conditions, with Melbourne expected to be the strongest performer over the near term," he said.
"Sydney is however lagging due to higher existing supply levels and several recent new building completions, but sentiment remains positive."
Hession noted vacancy had tightened in Perth and Brisbane, which would lead to positive effective rental growth in 2011, but that the Canberra market was expected to be the weakest performer over the near term.
"Overall, the outlook for CBD office markets throughout Australia is reasonably robust which is evidenced by the weight of capital in the market from international investors over the last 12 months," he said.
"Offshore interest remains strong in Australian office property markets, especially from Asian private equity firms."
"Super funds and wholesale funds are also coming back in to the market, and most of the large Australian real estate investment trusts have active buy mandates."
Hession said in addition to this, the market overall benefited from the relatively few office completions, particularly in the last quarter.
