A FLAGSHIP seafront development could be delayed amid economic uncertainty caused by the Brexit vote, property experts have warned.

Agreement on the £540 million Brighton Waterfront scheme, which includes extending Churchill Square to the seafront and rebuilding the Brighton Centre at Black Rock, was expected to be reached this summer.

But the key private partner in the project Standard Life Investments was forced to stop investors selling shares from its £2.9bn commercial property funds amid fears over falling values.

While the Standard Life fund is different to the fund behind the Brighton Waterfront scheme, concerns have been raised that the long-awaited regeneration project could be delayed in the new post-referendum economy.

The news comes as the Bank of England eased rules for banks to allow them to increase lending by up to £150bn, as the pound hit a 31-year-low against the US dollar.

Insurance giant Aviva followed suit yesterday and suspended its property fund due to “extraordinary market circumstances”.

Standard Life insisted the Brighton Waterfront scheme was not affected by Monday’s trading suspension – but refused to comment on whether the project might be delayed.

Considered crucial to the much-needed regeneration of the seafront east of the Palace Pier, council leader Warren Morgan said there was nothing to indicate the project was at risk, adding: "It is hugely important that we remain calm and positive in this period of uncertainty."

But Green Party convenor Phélim MacCafferty said: “We are deeply concerned about the potential impact on jobs, affordable homes and opportunities for all our residents if this deal falls through. This is a scheme brought into motion by the Green administration, and as such we are keen to see it succeed for the benefits we know it will bring to the city.”

The developments have been described as a clear sign the shock of Brexit is spreading from the financial markets to the property sector.

David Pegler, of Brighton Capital Management, said: “I expect as Standard Life and Aviva have made the first move further contagion could follow and we will see other property vehicles take similar action.

“There is no doubt this will put pressure on the industry and alienate some shorter-term investors. Investment in ‘bricks and mortar’ follows the economic cycle and recent developments have raised concern and uncertainty in the sector, which are likely to sort themselves out when the country makes decisions about UK politics and Europe i.e. invoking article 50.”

Sean Clemons, partner at RLF construction consultants, said it should not be assumed Standard Life would pull the deal, but said "what is more likely is that they will delay progress until the current high level of uncertainty caused by Brexit reduces."

Phil Graves, of Graves Jenkins property consultancy, also suggested the scheme could be put on hold to allow the markets to settle.

He added: "This is probably true of many major development schemes at the moment as we go through a period of uncertainty."

Tony Mernagh, managing director of the Brighton and Hove Business Forum, said the scheme still made long-term commercial sense.

He added: “But obviously Brexit has introduced a certain amount of uncertainty not only to any commercial property deals that are in their infancy but also to the UK economy generally."

A city council spokeswoman said: “The council and Standard Life Investments remain in active discussions about the project and should be in a position to make a further announcement shortly.”