«The tourist flow to Georgia has increased by more than 200% in 8 years.» We have learned why the real estate market in Georgia has become a «discovery» of recent times
It’s no secret that the Georgian real estate market has experienced a real boom over the past few years. What is the reason for this, and why has Georgia become so interesting in terms of investments precisely now? The real estate agency Geo Estate founder Elias Marino answered these and other questions from our Realting.com reporter and explained which projects are worthy of attention.
«You can find interesting investment proposals in Tbilisi, including options with a golf course.»
— The real estate market in Georgia has become a discovery for investors in the past few years. What contributed to this, in your opinion, and how long will it last?
— The real estate market in Georgia is promising for investment due to the high level of profitability and the low cost of real estate compared to other countries, the low level of taxes, and how easy it is to register properties in ownership. Here are some statistics:
- According to the index of economic freedom, Georgia ranks 12th in the world.
- According to one of the largest databases in the world, Numbeo, Georgia is among the top 10 safest countries in the world.
- According to the World Bank’s Doing Business rating, Georgia ranks 7th in the world in terms of favorable conditions for doing business. This rating takes into account such indicators as:
- The simplicity of starting a business (Georgia ranks 2nd in the world)
- The simplicity of registering property (Georgia ranks 5th in the world)
- Protection of minority investors (Georgia ranks 7th in the world)
- Enforcement of contracts (Georgia ranks 12th in the world)
- Taxation system (Georgia ranks 14th in the world)
Thus, Georgia has the most promising indicators in this area among the countries of the former USSR and is only second to Denmark among European countries.
— In what kind of real estate and in what cities is it worth investing money (if we consider the purchase of residential real estate as an investment)?
— If we consider the capital region, Tbilisi, you can find interesting investment proposals for apartments and townhouses on the market, including options with a professional golf course. And for lovers of commercial real estate, there are office space and retail space.
On the Black Sea coast, Batumi, in addition to classic resort real estate, there are new trends related to capsule hotels, coworking spaces, as well as balneology, cosmetology, and wellness topics. In addition, there are ski resorts in Georgia, where tourists worldwide love to come to celebrate the New Year, and lovers of authenticity will be interested in luxurious villas with their own vineyards and wine spa in the Alazani Valley.
— In which cities should you look for housing if you are buying for yourself?
— Regardless of whether you are planning to purchase real estate as an investment or for your use, it is better to consider the most developed regions of Georgia. It is important to consider the infrastructure, the quality of the properties, and the availability of a choice of residential complexes that comply with modern building regulations.
«You can make investments in premium real estate with an amount of $10,000.»
— How are things on the residential real estate market in Georgia now? (in comparison with the state of affairs a year or two ago) Have property prices gone up/down? In your opinion, Why?
— Based on the statistical data provided by our colleagues from Colliers International, then, compared with 2019, in September 2021, 19% fewer real estate transactions were registered in Batumi. As for Tbilisi, in September 2021, there were 7% more real estate transactions compared to the same period in 2019.
According to Geostat, in the second quarter of 2021, the residential property prices in Tbilisi increased by 10.1% compared to the same period in 2020. Thus, the prices for apartments increased by 7.5%, while the prices for private houses increased by 17.9%. At the same time, experts predict an increase in demand for private houses and land plots suitable for their construction in various regions of Georgia.
— What is the level of prices for residential real estate in the main cities of Georgia? What do prices depend on?
— Of course, the cost per square meter depends on the location and class of real estate. For example, in Tbilisi, the most prestigious districts are Vake and Mtatsminda, where the highest level of real estate prices are observed. In the case of Batumi, as a rule, the following principle applies; the closer to the sea, the more expensive properties get. There are exceptions, which include premium residential complexes located in the mountains at a distance of several kilometers from the coast. On average, the price of real estate on the primary market in Tbilisi varies from $400 to $3000 per square meter, and in Batumi from $400 to $2500 per square meter.
— Will real estate prices continue to grow? Why?
— According to the data of the National Tourism Administration of Georgia, in 2011, the size of the tourist flow to Georgia amounted to 3 115 527 visits, and in 2019 this number increased to 9 357 964 visits, which corresponds to an increase in tourist flow of more than 200% over 8 years. This implies an ever-increasing demand for rental properties and explains the interest shown by international hotel brands: Hilton Worldwide, Marriott International, Radisson Hotel Group, Wyndham Hotels & Resorts, IHG Hotels & Resorts, Millennium & Copthorne Hotels, to name a few. And at the moment, the construction of the first World Trade Center (WTC) in the region is underway in Batumi, where class «A» business and shopping centers will be located. Based on this, I believe that the Georgian real estate market has growth potential.
— What residential properties are in the greatest demand now? Why?
— I have noted a shift in investor interest from projects aimed at a wide range of consumers towards innovative concepts from the wellness resort category, focused on a specific target group. In addition, more and more crowdfunding models can be found on the market — when an investor is offered to purchase a share of an apartment or hotel room and receive a guaranteed rental income from this property in proportion to the size of their share. This type of investment allows you to be flexible and invest in premium real estate with an amount of $10,000.
— What pitfalls await an inexperienced buyer on the Georgian real estate market?
— If we are talking about investments, you most likely cannot do anything without a good specialist. You can, of course, try to deeply explore the real estate market of Georgia on your own, but even in this case, it would definitely help to communicate with experts who have relevant experience in this area. But, if for some reason this does not suit you, and you decide to do everything on your own, then I would advise you not to make impulsive purchases in the first days of your visit to Georgia and also not to combine real estate tours with wine tours. In addition, I would highly recommend enlisting the support of an independent lawyer who specializes in real estate deals and coordinating all your steps with them.