U.K. banks are among the most heavily exposed in Europe to a debt refinancing shortfall in the real estate market that could reach $155 billion in the next two years, forcing them to consider alternative ways of managing their portfolios, experts said.
Commercial property adviser, DTZ Holdings PLC, said that 56% of the European debt funding gap — which is the difference between existing debt and the debt available to replace it — is estimated to be in only two countries: the U.K. and Spain, while France, Germany, Italy and Ireland account for a further 28%.
For the U.K., the debt funding gap over the next two years is seen at $56.4 billion.
Although the problem could, in theory, be resolved by the estimated $156 billion available in Europe for real estate purchases over the next two years, property owners have been reluctant to sell assets at what they consider to be distressed prices. They have been selling some distressed and performing assets but continue to hold on to their commercial real estate portfolios.