The West Australian Government has signalled a major change in plans to develop one of its prime inner-city sites, foreshadowing a move towards retail and apartment buildings for the Perth City Link.

The move away from office developments at the project comes after the Metropolitan Redevelopment Authority's [MRA] agreement with developer Mirvac fell through amid tough market conditions.

The 13.5 hectare development site, between Perth Arena and the Horseshoe Bridge, has experienced a rocky six months, with one developer and a hotel proponent walking away before Mirvac's deal was terminated due to an inability to reach a suitable agreement.

Mirvac had an agreement to develop numerous lots on the site under its MRA deal, which also originally included Leighton Properties.

Mirvac's proposed developments had centred largely around commercial office buildings, but MRA chief executive Kieran Kinsella told a budget estimates hearing his agency was now looking at different options.

"The commercial market is subdued, so we will turn our attention to looking at other forms of development through our land sales," Mr Kinsella said.

"Perhaps bringing forward residential apartment mixed-use towers and maybe some more retail, rather than office commercial, to balance out that sales program over the next four years.

"Since we have gone public with the announcement that we have terminated with Mirvac we have had quite a few developers express interest in the land, and we did have developers who were keen to come across that land."

Mirvac deal could have generated $35m: MRA

Mr Kinsella told the hearing the MRA had hoped to bring in $35 million in revenue from the Mirvac deal over the next four years, but expressed optimism the changed focus could draw similar revenue.

He also dismissed concerns the Government would have difficulties finding developers to build apartments on the site.

"There are a lot of apartments in the CBD, but there are also not very many that sit right on top of a bus station and a rail station," Mr Kinsella said.

The MRA boss said it was still too early to give timeframes for any expected development.

Labor's planning spokeswoman Rita Saffioti said it was a significant backdown to change focus away from commercial developments.

"They tried to bring too much commercial space onto the market at the same time, together with Elizabeth Quay," Ms Saffioti said.

"$35 million was projected to be gained in sales from the land, and that $35 million is now in doubt."

Ms Saffioti predicted it would be difficult for the Government to recover any significant portion of its investment in the City Link project.