Foreign investment in Houston commercial real estate spiked to at least $1.7 billion last year, even as low prices in the oil patch dampened the local economy.
And though international investors now say they are less bullish on the area, local realty experts remain confident in the market's long-term attractiveness.
The city remains seen as a more affordable alternative to such cities as New York and San Francisco that frequently top the list for international investors, said veteran broker Ed Wulfe, chairman of Wulfe & Co. These investors also are drawn by Houston's friendly business climate and relative ease of development, he said, and the current slump in crude prices and the slowdown in the energy industry will not deter them.
"There is a psychological awareness of the energy weakness, but there is no question that short-term and long-term, energy will be back, and we'll be at the center of it," said Wulfe, who is chairman of Houston-based Wulfe & Co.
For the first time in several years, the Bayou City lost its spot among the top 5 U.S. cities where foreign investors want to put their money, according to the just-released annual survey of the Association of Foreign Investors in Real Estate, a trade group representing international institutional real estate investors.
Houston ranked 11th among U.S. cities in the 2016 AFIRE survey, falling from No. 3 the previous two years.

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Survey snapshot
Rankings of cities for global investments based on a survey of members of the Association of Foreign Investors in Real Estate:
Top global cities
1. New York (No. 1 last year)
2. London (No. 2 last year)
3. Los Angeles (No. 10 last year)
4. Berlin (No. 7 last year)
5. San Francisco (No. 3 last year)
27. Houston (No. 6 last year)
Top U.S. cities
1. New York (No. 1 last year)
2. Los Angeles (No. 4 last year)
3. San Francisco (No. 2 last year)
4. Washington, D.C. (No. 5 last year)
5 (tie). Seattle and Boston (No. 8 and No. 6 respectively last year)
11. Houston (No. 3 last year)
Source: Association of Foreign Investors in Real Estate survey conducted by the James A. Graaskamp Center for Real Estate, Wisconsin School of Business
Among global cities, Houston ranked No. 27 this year, down from No. 6 last year and No. 4 the year before.
The fall in the rankings coincides with a protracted decline in the price of oil, but local realty experts say foreign investors tend to be in it for the long haul and are not that concerned about the down cycle.
Plus, Houston's trophy buildings are still getting top dollar from overseas investors who are drawn to the stable political and economic climate in the U.S.
Among last year's larger deals, a German realty fund manager purchased downtown's 1000 Main for $440 million and a private investor based in Spain purchased BBVA Compass Plaza at 2200 Post Oak Blvd. in Uptown.
"Foreign investors have typically looked at core Class A properties with credit tenants with longer lease terms. That is still the case as evidenced by the sale of 1000 Main and BBVA Compass in 2015," Rudy Hubbard, managing director capital markets-investment sales at commercial real estate firm JLL, said in an email.
"The falling oil prices did not have any negative impact on these core deals. There will be continued foreign interest in core deals in 2016 despite the job losses in the energy industry."
More than doubled
Indeed, foreign investment in Houston commercial real estate more than doubled in 2015 to $1.7 billion, a report from real estate research firm Real Capital Analytics shows. That's the most of any year since at least 2008, the earliest figure cited in the report, which charts the local commercial real estate scene.
The amount represents 14 percent of the $12 billion investors spent on Houston commercial real estate last year, based on preliminary figures in the Real Capital Analytics report. The $12 billion, which could grow as year-end sales are added to the tally, is below the 2013 peak of $14.8 billion, of which $1.6 billion was foreign investments.
17% of the total
Nationally, foreign investment amounted to $87.9 billion in 2015, or 17 percent of total investments, according to Real Capital Analytics. The investors in Houston real estate came from China, Germany, South Korea, Spain, Canada, Israel and elsewhere.
On the newest AFIRE survey of foreign investor attitudes, New York held its spot as the most desirable city both globally and in the U.S., the survey found. London maintained its place as the No. 2 international city. Los Angeles, which had slipped No. 10 among international cities in 2015, claimed the No. 3 spot this year.
In the U.S., apartments and industrial properties tied as the preferred type of property for foreign investments, followed by the retail, office and hotel sectors, according to the AFIRE survey.
Though there is some concern of higher interest rates, none of the AFIRE members planned a major decrease in investments, according to the survey.
Nearly two-thirds of members said they expect to have modest or major increases in their investment in U.S. real estate in 2016, the survey found. Another 31 percent plan to maintain or reinvest their investments. No one reported plans for a major decrease.
"Foreign capital continues to view the U.S. as the safe haven that it is typified by stable, albeit expensive markets," AFIRE chairman Frank P. Lively said in an announcement.
The survey was conducted for AFIRE by the James A. Graaskamp Center for Real Estate, Wisconsin School of Business. Its membership consists of nearly 200 international institutional real estate investors from 21 countries with some $2 trillion in assets under management.