The 35-year-old former Republic of Ireland international left Fulham at the end of last season after the club's relegation from the Premier League.
Duff signed a one-year deal with Melbourne City, who are majority owned by the City Football Group, in the A-League in June.
Speaking to Perform on Tuesday, he said Chelsea – where he played from 2003-06 – deserved to be heavy favourites to claim the Premier League title.
"Obviously Chelsea are firm favourites," Duff said, speaking after featuring in a 5-0 pre-season friendly win for City.
"If [Jose] Mourinho doesn't win it in the first year, he always wins it in the second year. I don't think you can really look beyond them.
"They obviously had a good, strong win [against Burnley]."
Duff was less positive about Fulham, who let go of several senior players – including John Heitinga, John Arne Riise, Steve Sidwell and Giorgos Karagounis – at the end of last season.
Felix Magath's men have made a disappointing start to the Championship campaign, losing their opening two games.
"It's sad to see really what's happened there," Duff, who featured in Fulham's 2010 UEFA Europa League final loss to Atletico Madrid, said.
"From where the club was at four or five years ago, I'd be worried for them."
Even in the latter stages of his career, Duff remains hungry to succeed in Australia, where he will be joined for 10 games by Spain's all-time leading goalscorer and New York City signing David Villa.
Also joining Duff in Melbourne is Robert Koren, who has made the move as a marquee player after spells with West Brom and Hull City in the Premier League.
Koren made his first appearance for Melbourne City on Tuesday, playing a half in their 5-0 win over state league team Hume City.
Duff is delighted to have the former Slovenia captain alongside him in John van 't Schip's squad.
"It's great. Obviously been training with him for the past couple of weeks and I know him from the Premier League so he's a good player, and a great addition to the squad," he said.
"He's a good guy."
