Morgan Stanley is making a real estate comeback with its first higher-risk real estate fund since 2007. The fund's already attracted $1.7B from investors like CIC and Australia's sovereign wealth fund, but remains smaller than the firm's previous funds, the Wall Street Journal reports.

Those bigger previous funds were the gold standard from the 1990s and 2000s but took a nasty hit around 2006, with one $8B fund reporting losses of over 70%.

Post-recession, Morgan Stanley's real estate unit focused on raising money for buying core properties, but investors are now ready for riskier opportunity funds. So far this year, $47.7B has been raised in these riskier funds.

"The market is insanely competitive right now," co-chief exec of the real estate unit John Klopp says. "There's a ton of capital chasing real estate in every market in every nook and cranny."

The new fund has committed about one-third of its equity, meaning 10 closed deals and seven in progress, and is looking at less-competitive cities like Tokyo and Vienna instead of London and New York. [WSJ]