FRANKFURT, Feb 29 (Reuters) - Property lender Aareal earmarked $478 million in provisions for soured loans in 2023, the most in at least a generation and the latest sign of the severity of a commercial real-estate slump rattling investors on both sides of the Atlantic.

Aareal, based in Germany but operating globally, on Thursday reported that its full-year allowance for loan losses grew to 441 million euros ($477.78 million) from 262 million euros during the first nine months of 2023 and more than double the 192 million euros in 2022.

The figure is the highest this century and surpasses a recent peak of 344 million euros at the height of the pandemic.

It comes as prices and demand for commercial real estate decline sharply in the United States and Germany.

"Aareal Bank expects the environment in the US office property market to remain challenging in the 2024 financial year," it said.

Aareal is one of the biggest property lenders in Germany, Europe's largest economy, and together the nation's banks are among the continent's heaviest lenders for commercial property. ($1 = 0.9230 euros)

(Reporting by Tom Sims Editing by Miranda Murray)