Understaffing at the Overseas Investment Office is causing delays which are being labelled "embarrassing" by one law firm.

Chapman Tripp has issued a new report on capital markets activity.

Partner John Strowger says even though New Zealand's overseas investment screening is restrictive, interest remains high.

But he says the OIO can't handle the volume of applications it's receiving.

"We've had situations where very large high profile transactions, where there have been a number of regulatory approvals in a number of countries required, and quite frankly to our embarrassment New Zealand has dragged the chain in terms of clearances."