The commercial property sector suffered its sharpest fall in activity in five years in March as developers continued to tighten their belts amid the deepening credit crisis.

Savills Total Commercial Development Activity Index showed a net balance of 鈥�16.4% in March, compared with 鈥�6% in February.

Savills Future Activity Index, which measures office, retail, leisure and industrial, registered 鈥�19.6% in March, compared with 鈥�7.7% in February.

Savills said tighter lending by banks and concerns over the prospects for the global economy were the main factor behind the latest falls.

The high interbank lending rate has prevented investors and developers from raising cash in the capital markets. The three-month rate is currently about 6%, close to its highest levels this year.

Mat Oakley, Savills鈥� head of commercial research, said: 鈥淭he market is not going to start to recover until the cost of money improves. Until the rate moves down I don鈥檛 expect a significant number of developments to take place over 2008. There鈥檚 no prospect of a return to the levels of early 2007.鈥�

Savills said 28% of developers reported a fall in activity in March and 12% reported an increase in activity.

The private office sector was the worst performing category, closely followed by public sector retail and leisure.

The South-east, excluding London, was the worst performing area. Activity in the capital itself was broadly unchanged on the previous month, but about 37% of developers reported a drop in activity in the rest of the UK.