The retail property sector is not expected to hit bottom until the end of this year or perhaps later despite expectations the local economy could see an improvement in the second half, according to property agent Sheraton Valuers. In its review of the sector, Sheraton predicts more closures of shops due to the continuing slowdown in local consumption. That would further boost growing vacancy rates, it said. The agent expected landlords to offer more preferential terms such as an extension of rent-free periods to secure tenants. The SAR was expected to be pressured by a stream of new supply of shopping arcades in the next two years. Following the completion of 2.6 million square feet of retail spaces in several malls such as One International Finance Centre in Central and Gateway Two in Tsim Sha Tsui in the past quarter, Hong Kong will see another one million sq ft of new space from two retail arcades in Tsing Yi and in Tin Tsui Wai. Sheraton said a further supply of 2.2 million sq ft was expected next year. The agent said market conditions remained gloomy this year although it predicted the economy might see an improvement in the second half. The recovery of the local economy historically led the revival of local consumption by several months. Therefore, Sheraton said the retail property sector might not see a recovery until the end of this year or even later. Retail property rents saw a decline of between 40 and 55 per cent last year, it said.