The construction of a new shopping centre in a prime area in the heart of Knysna's CBD has been delayed after oil contamination was found on the land.

A National Parks Board official identified the pollution a month ago when he walked past the Main Road construction site and alerted the Knysna municipality about an unusual smell there.

The site of the shopping centre - which will have retail chain Woolworths as an anchor tenant - was previously occupied by a McDonald's fast food outlet and before that there were service stations on the property.

While further investigation was conducted on the soil, construction was put on hold after fears of a possible threat to humans.

The construction site was closed more than two weeks ago following concerns that the pollution might cause problems during building.

The property developers appointed an independent Cape Town-based firm of pollution experts to conduct tests on soil samples at a laboratory in Johannesburg.

Roger Gallagher, of Pam Golding Properties, who is responsible for the developers' account said the test results came back on Monday.

"The results indicated that there is no unacceptable risk to humans," he said.

"Arrangements have been concluded with the department of water affairs and forestry, the Knysna municipal environmental authority and the National Parks Board to continue the removal of soil from the site."

The tests found a minimal amount of petroleum and hydrocarbons.

An official from the Knysna municipality's town planning and environmental office, who cannot be named due to municipality communications protocol, said a report had been compiled on the findings.

He said it had not yet been established how the oil ended up underground in the middle of the Knysna CBD.

He also said it could not be confirmed whether either of the two service stations, which occupied the land before the McDonald's outlet, was responsible.

He said construction was expected to resume as soon as another the soil could be relocated and treated.