European banks are faced with a €156bn shortfall of funds which will be required to refinance commercial real-estate debt in the next two years, according DTZ Holdings Plc.

Research from DTZ indicates that €480bn worth of property loans will mature by the end of 2011 and as the value of the properties backing them are below the amount required to refinance the debt, banks will be unable to do so. Half of the shortfall is attributed to the Spain and the UK.

Nigel Almond, real estate strategy researcher for DTZ, said: “European banks have not wanted to and have not been forced to sell loan books at distressed prices. Changes are at hand where both banks and equity investors will come under increased pressure to more urgently find effective solutions.”

The European banks are stuck with the legacy of €1.8trillion of loans given those buying stores, offices and warehouses in the five-year real estate boom that ended in the middle of 2007. With many granted near the market’s peak at over 80% of a buildings value. Prices then fell by around -26% across continental Europe and -44% in the U.K, leaving the majority of borrowers owing more than the value of the buildings.