Why Melbourne's property market is heating up

A mix of reasonable land prices and relatively stable market conditions has seen property in and around Melbourne become the subject of increasing scrutiny from large development firms - both locally and overseas.

According to a number of reports, inner-city real estate is becoming increasingly popular - perhaps signalling to investors with property management training that Victoria's capital is worth a second look.

The divisional director of CBD sales and investments at Savills Nick Penden says there are a number of factors that may be playing a part in boosting the city's popularity with developers.

Penden asserts: "Melbourne offers sustained population growth, inexpensive land compared to home markets, the potential for significant growth, the benefit of freehold title, and its stature as the world's most liveable city."

While there is a mix of businesses interested in getting involved in the capital city's property market, many of the international investors hail from eastern countries such as China and Malaysia.

"With the global economy experiencing some uncertainty, Australia, and more particularly Melbourne, is the destination of choice for Asian developers seeking to secure development land for high density apartment projects," said Penden.

Speaking on the increasing level of foreign interest in the Victorian urban property market, Savills' head of city sales and investments Clinton Baxter said that many of the units sold had real residential development potential.