The heat in the market – stoked by the low Australian dollar and low interest rates – is sparking a sell-off among owners and a buying spree from both local and offshore investors.

Knight Frank agent Langton McHarg, who is marketing a building at 606 St Kilda Road with Allard & Shelton, said the entry of cashed up offshore investors, who are used to much tighter yields, had radically changed the market.

"With the offshore parties coming into the market, local investors have started to realise our values have been underunder-weighted. That's why we are seeing a significant correction in pricing," Mr McHarg said.

Thomson Geer lawyer Eu Ming Lim, who acts for several offshore investors, said the falling dollar was making Australian property even more attractive.

"The 20 to 30 per cent depreciation in the Australian dollar automatically makes everything cheaper here," Mr Lim said.

Recent deals include the $40 million sale of the Centreway building to Indonesian and Malaysian investors. Its Singaporean owner bought Centreway in 2007 for $34 million from a Henkell Brothers syndicate, on a 5.5 per cent yield.

Title documents show the new owner, Centreway1, has paid $40 million for the 100-year-old seven-level building, which has 23 shops in the ground-floor arcade.

Late last year, Henkell Brothers Investment Management sold 600 Collins Street to a syndicate of Chinese, Malaysian and German investors for $60 million at a sub-5 per cent yield.

The Henkell Brothers syndicate had purchased the 8000-square-metre building for $5.5 million in 1997, when the market was in one of its periodic troughs.

Private investors who have cashed in on the rising values include Matt and Ken Vaughan. They sold 410 Collins Street – the Bank of China building – for $28.3 million on a 4.6 per cent yield in a deal handled by CBRE and Mulcahy & Co. The Vaughans paid only $5 million in 1998.

The new owners of The Block Arcade, the Cohen family, offloaded a tower at 446 Collins Street for $34 million on a 4.5 per cent yield in a deal executed by Allard Shelton and CBRE. They paid $18.3 million for the B-grade building in 2010.

Melbourne's yield range of between 7 per cent seven and 9 per cent was in the past, as buyers who were used to Hong Kong and Singapore yields of between 3 per cent three and 5 per cent entered the market, Mr McHarg said.

Yields would fall below the benchmark 7 per cent last seen before the global financial crisis crushed values in 2008 and the following years.

"There weren't offshore parties competing for properties in the pre-GFC period," he said.

Colliers International's John Marasco, who is handling the sale of Hooker House at 520 Collins Street, said the street was the city's prime address and always attracted buyers, both local and offshore.

Hooker House, which is owned by Malaysian-born, long-time Melbourne investor Jason Yeap, was owned by George Herscu until his empire collapsed in the early 1990s.

Mr Yeap paid $15 million for the building in 2003.

Mr Marasco said it was expected to fetch more than $50 million.

The strength of the market will be tested on Thursday when 415 Collins Street goes to auction.

The building, which houses the Sherlock Holmes pub, is the first auction on the strip since 2009.

CBRE agent Josh Rutman, who is handling the auction, said the appetite for risk was strong.

"We are in a perfect storm. Foreign interest combined with renewed demand from local groups has created unprecedented heat in the market," Mr Rutman said.