Inflated rental returns are prompting real estate investors to return to the Sydney apartment market, particularly in new developments where high depreciation deductions can generate positive or neutral cash flow investments.

"Sustained high demand for rental properties is motivating property investors to act quickly," said Adam Sparkes, sales manager at Frasers Property.

"We've sold 11 one-bedroom suites at Lumiére in the past six weeks alone."

Lumiére is one of several new inner-city developments that cater to young executives, with a focus on lifestyle features such as fitness centres, swimming pools, theatrettes and common lounge areas, set within walking distance of employment nodes in the CBD.

Of the 33 one-bedroom apartments sold in the "vertical village" complex, located adjacent to Town Hall train station, two-thirds have been picked up by investors, Sparkes said.

"Rental properties are being snapped up as soon as they become available," he said.

"These apartments are renting for $500-550 per week, and up to $700 per week if furnished, as young professionals … want the kudos without the financial commitment, so they are choosing to rent."

Mid-city living with local shopping, bars and restaurants "is a huge drawcard" for both renters and owner-occupiers, he added, with the remaining one-third of property buyers in the development comprised of first homebuyers and out-of-towners seeking a Sydney "crash-pad".

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