updated 04/03/2012 AT 11:00 AM ET
•originally published 04/03/2012 AT 12:00 PM ET
Is the romance heating up Down Under for Wilmer Valderrama and Minka Kelly?
After an evening of partying at the opening of Marquee – The Star, a new nightclub in Sydney, Australia, they were spotted taking a cozy walk along the water at Balmoral on Tuesday.
Fueling rumors that the two are more than friends, Valderrama, 32, draped his arm around Kelly, 31, who was all smiles in a casual blouse and denim shorts.
Valderrama and Kelly were first linked together last month, when they were “all over each other” in a private booth at L.A.’s Greystone Manor. “They were very flirty and dancing close,” an onlooker previously told PEOPLE of their P.D.A.-filled night at the club. “They even left with each other.”