Returns on office buildings surged to 22.7 percent, beating the five-year average of 13.5 percent, according to a statement today by IPD, which prepares the index tracking almost A$93 billion ($91 billion), and the Property Council of Australia. The return the previous year on Australian direct property investment was 17 percent.

Vacancies in Australian malls and office towers are dropping, pushing up rents, as Chinese demand for the country's iron ore and coal boosts growth. Direct property investment returns advanced at the same time that the S&P/ASX 200 Property Trust Index dropped 27 percent and the S&P/ASX 200 Index of Australia's biggest companies fell 9.5 percent. The CBA Bond index earned 4.2 percent in the period, according to the statement.

Average office costs in Sydney jumped 23 percent in the space of a year, taking Australia's largest city past Brisbane as the country's priciest market, CB Richard Ellis Group Inc. said in a reported released May 28.

Sydney's annual occupancy costs, including service charges and taxes, rose to an average of $68.52 per square foot, according to the report by CB Richard Ellis, the world's largest commercial property broker. Perth was second in Australia, rising 32 percent to $66.58. Brisbane costs rose 20 percent to $63.32.

Returns on shopping centers and industrial properties totaled about 14 percent in the year to March 31, IPD said in today's report.

The Property Council/IPD index tracks the performance of more than 1,040 investments.