Real Estate & Construction

The real estate market and construction industry are one of the most rapidly growing industries of the Georgian economy. Construction in Georgia enjoyed high rates of output and employment growth over the past few years, with the strong upward trend expected to continue. The construction business continues to attract increasing investment and banks are continuously increasing their lending to the sector.

A high demand for residential and commercial space has been followed by the evolvement of many construction and development companies. Even though the prices for real estate have increased more than four times since 2003, demand yet continues to exceed existing supply across all sectors.

Residential Real Estate

Over the past few years demand for quality residential products has been continuously outstripping supply. The continuous increase in demand has been influenced by high growth of income levels, the availability and the affordability of mortgage facilities. An expectation of continuous price acceleration, the increased attractiveness of the country’s investment environment has attracted large number local and international developers. According to the Department of Statistics, Real Estate & Construction stands at 22% of total Foreign Direct Investment.

Tbilisi is Georgia’s largest and most prosperous city, with the most developed and fastest growing residential market. Over the past five years there has been major increase in prices in Tbilisi’s residential market, mainly caused by continuous under-supply.

Residential Real Estate Price Dynamics, Tbilisi

Offices Premise Market Overview

Over the past three years GDP of the country has increased approximately by 10 per cent. One of the reasons for such rapid growth was an increase of FDI inflows which in year 2008 equalled to USD 1.294 billion. The business friendly environment has stimulated local business development:

Number of Registered Businesses

Increasing number of local and international organizations and companies result in higher demand in the offices premises market in Tbilisi. The supply of B & C class office premises is much higher than that of A-class.

Office Space Supply in Tbilisi

Retail Market Overview

The retail sector of the real estate market is seeing major switches from old soviet-style open markets and bazaars to modern shopping centres. Based on the announced projects, Tbilisi in the next 3-4 years will have at least and additional 150,000m² of shopping centre space.

Demand for retail real estate is largely driven by the high growth rate of retail turnover in Tbilisi. From 2003 to 2008 retail turnover in Tbilisi grew by almost four times. Future growth of GDP per capita and level of disposable income will further increase the demand.

Warehouse Market Overview

Despite Georgia’s favourable location, the warehousing sector still remains the least developed part of the real estate sector. There are no A &B class warehouses facilities and there is no presence of international professional warehouse operators. According to the Georgian statistics department, there are around 15 warehouse facilities in Tbilisi with total stock of order of 100,000-120,000m²

Georgia is considered to be one of the main transportation corridors connecting Europe to Caucasus region and Central Asia. Western business demonstrates increasing interest in Eastern European countries; Georgia is at the crossroads of the North-South and East-West transport corridors.

Other factors stimulating demand for warehouse facilities are import of goods and retail turnover. From 2003 to 2006 the import of goods in Georgia increased by three times and retail turnover grew by almost four times.