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Europe is seeing a resurgence of appetite for risk among institutional investors, fund managers said last month at the Inrev annual conference in Barcelona.

‘We are seeing a lot of appetite for value-added real estate and a resurgence of opportunistic,’ said Barry Blattman, managing partner at Brookfield Asset Management.

While there is still some reluctance by pension funds to step back into risk, investors understand that going up the risk curve is the only way to match their liabilities, he added.

Blattman's view is supported by Inrev's Investment Intentions Survey 2013, which shows that for the first time since the financial crisis, investors have a preference for value-added funds. Nearly 43% of investors surveyed claimed an interest in value-added funds compared with 21.9% in 2012.

The study suggests a change of direction in investors' persistent flight-to-safety attitude. On a global basis, fundraising volumes for opportunistic-style funds more than halved following the financial crisis, according to Dan D’Aniello, chairman and co-founder of the Carlyle Group.

‘The fundraising level went down 54% in 2009 and has not improved since, remaining at €315 bn in 2012,’ said D’Aniello of Carlyle, which manages 25 funds with $40 bn of real estate assets globally.

Commenting on the state of the real estate private equity industry post-crisis, D’Aniello also noted that the sector has been faced with a number of regulatory changes and government over-regulation is still a concern. ‘But these changes have not yet proved disruptive,’ he added.

The amount of equity required for deals has risen by nearly 10% to 40% over the past six years, and
returns have come down on a relative basis but they continue to outperform public equity markets, he added. ‘In the 1980s leverage was the driver of value appreciation, today it is operational efficiency.'