Property investment took a hit in 2007 with €1.5bn spent compared with €3.6bn last year, according to Jones Lang LaSalle's end of year review and outlook.

The property firm said yesterday that it expects to see €2bn invested this year, but insisted that the lower than expected total in 2007 was "a healthy outcome", considering the current economic climate.

It added that 2007 was also a year marked by limited activity in office property investment with only 17 deals completed compared with 39 completed deals in 2006.

The review said that Irish investment in overseas property remains strong, with an outlay of €8.21bn, adding that this figure was expected to increase next year.

"We expect Irish investors to spend somewhere in the region of €9bn to €9.5bn on overseas in 2008," said John Moran, managing director capital markets at Jones Lang LaSalle.

In the commercial property sector, while values grew by more than 8pc this year, the figure is significantly down on previous years.

In the retail sector, the property company noted that, over the past twelve months, most of the key fashion retailers had achieved national representation, and there were therefore very few remaining locations where these would need to establish a presence.

In addition, 2007 marked a year of record rents being paid with €12,000 per square metre paid by Tommy Hilfiger on Dublin's Grafton Street and €8,300 paid by Bests on Mary Street.

The report added that the high volume of retail space due to come on stream throughout the country in 2008 was likely to result in key retailers being in a postilion to demand more concessionary terms.

In the development land market, a number of questions still remain, according to Jones Lang LaSalle.

For example, the credit crunch as a result of the US subprime crisis, coupled with the latest series of interest rate hikes, has led to a situation where sites are no longer holding their value.

"In addition, because land is generally viewed by banks as the more risky property lending option, and because recent difficulties in the residential market have merely served to exacerbated banks' already negative sentiment, the residential markets are pulling down land values for everyone else in the market," said Mr Moran.

Commenting on the figures, John Mulcahy, managing director of Jones Lang LaSalle, called on the Government to cut stamp duty.

He said that a rate of 9pc was manageable in a 'raging bull market', but that stamp duty must now move closer to the current inflation rate of around 2pc.

Mr Mulcahy also said that sellers would have to be careful to get their pricing right as the market continues to slow.