The tough conditions in retail property are forecast to linger a while longer, but lower interest rates and improved product offerings should eventually lead to better times.
According to an Australian Property Institute survey, retail property is seen as at the bottom of the cycle in Sydney and Melbourne, while Brisbane has commenced the upswing.
The survey of staff from 30 companies - comprising brokers, fund managers, bankers and valuers - by the API's NSW division, uses the clock system, whereby 12 is the top of the cycle and six is the trough.
It shows retail property in the three eastern seaboard cities is sitting between 6pm and 7pm, indicating it is moving along the upswing cycle.
In a year's time, it shows Sydney as progressing the fastest.
In Melbourne, both retail and residential property are at the bottom of the cycle.
In two years' time, the respondents expect the retail sector in the three cities to be near 9pm, or halfway up to the peak.
In terms of investment, retail has been the most active of all property sectors.
The most recent deal was by GPT, which sold its half share in Erina Fair on the central coast. Although unconfirmed, the buyer is understood to be National Pension Service of Korea, for an amount of $397 million.
JPMorgan analysts say the sale was consistent with GPT's strategy of "down-weighting" retail and adding industrial, so it came as no surprise. "Given GPT didn't control management rights, and expansion potential in the medium term is limited, it makes sense to sell," they said. "GPT continues to position itself to 'upweight' its industrial exposure."