This correlates with a range of new sales that have seen assets being snapped up by domestic investors since the start of this financial year.

One of the latest was 28 O'Connell Street, Sydney, which was bought by the Coombes Property Group for $91 million. The agents involved were JLL's national director of sales and investments, NSW, James Aroney and JLL's senior executive of sales and investments NSW, Steven Tsang, and Colliers' national director Sydney CBD Sales, Vince Kernahan and national director, Adam Woodward.

The demand for the office sector is also boosted by sharp yields and stronger rental growth.

CBRE's head of research for Australia, Stephen McNabb says in a new report that net capital inflow into Pacific real estate in the first half of 2016 was $720 million, comparing favourably to the $17 billion, net capital outflow recorded in the previous corresponding period in 2015.

Mr McNabb said the big shift in net position reflected a decline in capital outflow from domestic investors which in the first half of 2015 reached $4.4 billion but fell away to $1.4 billion in the first half of 2016.

"Investors are more inclined to 'stay at home' in times of heightened risk, preferring markets they know best," Mr McNabb said.

"Several events through the first half are likely to have impacted confidence: greater stock market volatility from September 2015 to February 2016, persistent concerns over the Chinese economy (albeit receding recently), the US election and Brexit.

"Inbound capital prefers office assets because they are typically less management intensive and better suited to passive investors. Additionally, yields on Australian offices since the GFC have held onto a sizeable (but diminishing) spread over office markets such as New York, London and Hong Kong."

The director of research at Colliers International, Luke Dixon, said the demand was boosted by the fact that metro office markets have generally performed well over the first half with most major metro markets seeing yields compress over this period.

"Rental growth has been seen in most major markets and demand for space has mostly improved resulting in vacancy falling," Mr Dixon said.

"Residential conversion remains a key issue for new supply in most markets, in particular those markets which are not protected with a commercial zoning."

Mr Dixon said the combination of lower vacancy, falling supply and higher total returns would typically correspond with a similar fall in initial yields and tight pricing. However, in the case of A-grade metropolitan offices, yields had remained firmly higher relative to their CBD counterparts and compressed at a slower rate over the past three years.

"CBD A-grade yields have compressed by over 120 basis points across the east coast, whereas east coast metropolitan A-grade yields only compressed by 60 basis points," he said.

"A significant factor in the strong performance of A-grade CBD yields has been the volume of domestic and offshore capital pursuing opportunities.

"Inquiry volumes for investment sales of CBD assets, is almost double that seen in metropolitan sales campaigns. This weight of capital can in part can be explained by the volume of stock available between the two markets."