Shops in Sturt St, Howitt St, the Bridge Mall and smaller retail strips have become increasingly popular in the past five years as investors observe less risk of vacancies.

The returns on commercial properties in Ballarat of between 6 1/2 and 7 1/2 per cent have attracted local and Melbourne buyers.

Real Estate Institute of Victoria Ballarat branch chairman Trevor Booth said: "In the past it was seen as a risk to buy a commercial property in case a tenant left and the property was left vacant.

"Now they are much more popular because of the confidence in the local economy.

"That's where the market has turned around.

"In Melbourne the returns are between four and five per cent, and that makes provincial centres like Ballarat, where the returns are higher, more attractive."

Mr Booth said the return on commercial properties was also attractive because buyers did not usually have to pay for extras like rates, maintenance and insurance.

Commercial properties in Sturt St sell for between $500,000 and $800,000, while shops in smaller strips like College St are available for about $200,000.

Ballarat Real Estate director Ron Morrison said many investors diversified into commercial properties after testing waters in the residential market.

"If you manage to secure a commercial property it's a very good investment, especially in a strip like Sturt St," he said.

"We're always on the lookout for shops in Sturt St and if we had a dozen good commercial properties today they'd be gone by tomorrow.

"Everyone knows what a good investment a residential property is and I think people are realising what a good investment a commercial property can be."

Bartrop Real Estate director Bruce Bartrop said a stable market meant the value of commercial properties had steady growth.

"Ballarat is very good to invest in because there are not the peaks and troughs you get elsewhere," Mr Bartrop said.

"Commercial properties are a good investment because even though it's a little bit cyclical, they keep a steady pace of growth and secure returns without the problem of maintenance.

"We have a lot of interest from people from out of Ballarat interested because of the high returns."