Commercial property specialists Cushman & Wakefield executive managing director John Coppedge said: 'The US property market is up and as active as it ever has been, particularly for investment properties.' Property experts say strong demand for space in central business district sites is reflected in rising prices across the country.

But Cornerstone Properties investor relations vice-president Karin Maas said the outlook varied widely between commercial centres.

Ms Maas said: 'Overall, most markets are quite tight in central business districts, most are experiencing rent rises. But new construction is causing prices to taper off in some areas.' Demand remained tight in New York, Boston, Seattle and downtown San Francisco, where limited space tended to restrict big new developments, she said.

Cushman & Wakefield investment research director Janice Stanton said business districts had rebounded during the past four years.

San Francisco vacancy rates have fallen from 11.4 per cent to 4.1 per cent during the past five years while rents have jumped from US$23.70 per square foot to $41.40.

New York vacancy rates have dipped from 14.3 per cent to 8.1 per cent and rent has jumped from $35.05 per square foot to $41.50.

In these cities investment returns on commercial property have jumped an average 33 per cent.

But in other cities, such as Dallas, Houston and Atlanta, huge construction projects could make rents level off.

Commercial property demand would remain buoyant as long as the economy was strong, Mr Coppedge said.

Occupancy rates are about 90 per cent which, allowing for usual turnover, meant properties were effectively full. Increasing prices have caused yields to dip from about 10 down to 8.5 per cent during the past five years.

He said: 'If a Hong Kong investor is looking for an investment property in the commercial sector then I recommend that they learn about the market first because if a property comes along they are going to have a lot of competition.

'You have to act quickly if you want to avoid paying a premium above the market.' Mr Coppedge said Asian demand for US commercial property had been muted because of the problems many speculators and developers faced in domestic markets.

'They are trying to figure out their own market and what they need. They are trying to hold on to what they have.' Demand for residential property was booming, with the cheapest interest rates in five years driving the market.

The average interest rate on a 30-year mortgage has dropped from 7.05 per cent to 6.9 per cent since the beginning of the year.

Housing experts estimate banks will make available about $1.33 trillion this year for home purchases and refinancing, up from $834 billion last year. The record was $1.2 trillion in 1993.

The median-priced family home in the US was selling for about $130,500 in May - approximately $7,400 more than the same time last year.

Median prices varied from $173,000 in western states to about $113,100 in the mid-west.