(Adds central London house price figures)
By Costas Pitas
LONDON, Dec 6 (Reuters) - Up to half of planned commercialdevelopments in central London could be delayed over the nextfew years due to concerns about Brexit, and overall investorreturns will be flat in 2016, estate agents Savills saidon Tuesday.
Commercial property was one of the first sectors to be hitin the immediate aftermath of the June 23 public vote to leavethe European Union, with investors pulling cash out of funds andforcing many to be temporarily suspended.
Savills said that across Britain there could be a decline ofup to 40 percent from 2017 until 2021 in development activity ofretail, office and industrial property, with up to 50 percentdelayed in central London.
"This would definitely be Brexit-related - a mix of lender,developer and occupier risk-aversion," Head of CommercialResearch Mat Oakley told Reuters.
Returns for investors, primarily made up of the rents theyreceive and the growth in the value of the asset, will rise byjust 0.4 percent this year, compared to an increase of 13.2percent in 2015, Savills said.
There would be a slow recovery over the next few years withreturns increasing by 1.4 percent next year, 5.3 percent in 2018and 7.8 percent by 2021, it added.
"We were forecasting a declining total return more than ayear ago, but Brexit has resulted in a sharper than expectedcorrection in capital values," said Oakley.
Demand for luxury homes in central London, where a highproportion of buyers are foreign and domestic investors, hasalso been hit in recent months due to increased propertytaxation and the uncertainty created by Brexit.
Consultancy Knight Frank said on Tuesday that a 4.8 percentfall in prime central London house prices in November was thesteepest drop in just over seven years.
Prices in the capital's most desirable postcodes, rangingfrom Knightsbridge and Belgravia to Notting Hill, have recordedever-increasing annual falls in recent months with pricesexpected to be flat next year.
But Savills said the global uncertainty created by eventssuch as Brexit, Donald Trump's impending U.S. presidency andupcoming European elections could push investors towards safebuys in London, with its stable legal system and relativetransparency.
It said the roughly 15 percent depreciation in the value ofthe pound against both the dollar and the euro since June hasgiven an effective discount to many foreign buyers, which couldbuoy sales in central London into next year. (Editing by Stephen Addison)