The commercial property market of Australia has witnessed its lowest level of returns in nine years, with the retail remaining as the weakest sector.

Figures from The Property Council and MSCI Australia Annual Property Index revealed that the total returns composed of capital and income growth have declined significantly from 11.6% a year ago. While gains have been fluctuating since 2010, the recent result is the most pronounced slump so far.

The downturn was mainly driven by the weakness in the retail property sector, which recorded returns falling to 3.7% from 8.4% a year ago as capital growth turned negative.

MSCI research vice president Bryan Reid said some investors expressed worries that the cycle could be nearing the peak as total returns continue to slow and capital growth diminishes.

"Fears about the impact of e-commerce on the sector have continued to weigh on retail asset performance and cap rate compression appears to have abated over the last quarter," he told the Australian Financial Review.

He added: "The decline in retail performance has been particularly pronounced in Perth and Brisbane, with retail total returns falling into negative territory in Perth.

The office sector remains as the source of hope of the commercial property market. However, office property returns also fell to 11.6% from 14.7%. The slowing was due to the moderation in the gains of secondary offices in Sydney.

On the other hand, total returns in the industrial property increased, jumping from 11.5% to 13%.

Of all the capital cities, only Sydney and Canberra managed to maintain a double-digit overall returns growth. In fact, the two cities had a 10.2% total return for the 2019 financial year. On the flipside, Perth remained the weakest, with total returns hitting 2.8%.