Ever looked up at those downtown Auckland apartments and wondered just how many there are and the number of people they house?

Well, how does 24,000 units sound - with perhaps 40,000 or more people. That's about the population of Whangarei, happily cooped up in a square kilometre or so of the central city.

In real estate terms, "this is an income market, not a capital gain market", says Martin Dunn, managing director of City Sales, one of the biggest players in the Auckland downtown apartment business.

What he means by that is: put your money in, enjoy good rental returns but, once you've cleared your expenses, don't bank on making a profit on the deal when you sell in four or five years.

If you bought off the plans a few years back and you're still holding, you will have kissed goodbye to a fair chunk of your capital outlay.

With no other developments on the horizon, high demand from renters across the board and the likelihood this year of more pressured sales from the demise of property companies such as Blue Chip, the apartment market can be attractive to buyers who do their homework. The rental yield underpins prices, so the downside risk at today's levels seems limited. Studios the size of about 25-30sq m may be hellishly small, but people are paying $250 a week to rent them - a strong return on the price of $100,000 to $120,000 in a freehold block. Step up to a small one- or two-bedroom apartment and the rent will generally range from $280 to $320 for a unit costing $140,000.

Those sorts of yields - in the seven per cent to nine per cent range - are beyond the dreams of the suburban investor.

Dunn's assessment is that apartments have been selling at between $3000 and $5000 a square metre, which by his reckoning is about half replacement cost. On that basis - with high rental demand and no new developments coming - logic would expect a creep in value.

But although demand has picked up strongly over the past year, values have gone nowhere. The surge in sales he expects in 2010 - as hundreds of owners burnt by "spruiker" property deals are forced to sell - will do nothing to increase values.

Still Dunn says the CBD apartment market is a robust one with a life of its own and, now that it has matured, offers a lot to the right sort of investor. Why spend a million dollars on an industrial property with one tenant in Penrose, he asks, when you can buy five one-bedroom apartments with five different income streams at a better yield - and sell one in a couple of weeks if you need the cash? Interestingly, Dunn thinks some leasehold properties can now offer better value than freehold.

When they first came on to the market they were much too expensive and bad press since has had a big impact on prices, he says, but leasehold prices are now out of kilter and offer good value.

Ray White's Damian Piggin says his company had an outstanding past four or five months after a slowish start to the year. Piggin says the flourish was fuelled by low interest rates and perhaps the sense that the CBD apartment market had matured - with vendors realistic about prices and buyers happy to look at a good yield. But while demand picked up in the last half of 2009, the overall result for the year was fairly modest, according to QV data. Statistics show there were 279 sales, not counting mortgagee sales, in the final quarter (compared to 305 in the same period 2008), and 414 in the three months to September 30. Put that alongside the 634 in the last quarter of 2006 and 569 for the year earlier (when the banks were less demanding), and it suggests downtown investors are still cautious. However, multiple bids at auctions that are selling most listings point to a reasonably healthy market.