Adjara Investors Planning for the Future

Known as the Pearl of the Black sea, Batumi is a favorite amongst tourist spots and its popularity is increasing steadily. Tourists are not the only people looking to Batumi for new experiences though: business men and women are investing in real-estate and construction, and since the beginning of the 21st century, architects have undertaken multiple projects in Batumi, making sure their marks are etched into the Black Sea city.

Today, Batumi is a hub of innovative architectural design and change, but like a pearl being shaped over time, Batumi is far from finished, and with Batumi Stadium, one of the more massive and influential constructions underway, it is evident that Batumi will become an even more valuable asset to the region and country.

Construction of the stadium commenced on January 21 by order of the Ministry of Economy and Finance of the Autonomous Republic of Adjara, the cost of construction being estimated at around about $40 million. A project this size will catch the attention of many investors, be it veterans looking for a new playground or new kids on the block looking for a safe investment. The influence of such a construction does not simply hover over sports as, while being built, it provides more than 500 new jobs, and when finally completed, estimated for late 2020, the stimulation to the economy of Batumi and in turn Georgia will circulate vigorously, pulling in tourists, football fans and investors alike.

“This very important project will enable us to host very important events in Batumi,” said Mamuka Bakhtadze, the Georgian Prime Minister, after observing the construction of the new football stadium in Batumi on 5 August. “This is very important not only for sports events but to attract more tourists to the city and Adjara. In addition, we have plans to encourage the urban development of Batumi and to establish European standards. A stadium is a necessary attribute of any successful European city.”

Construction is one of the most dynamically growing sectors in Batumi. Having kicked off some 10 years ago, with more than 1.5 mln. m2 construction area, competition is fierce on the market, making the sector very promising in terms of growth and development. Apart from international companies, local firms are prospering and expanding their activities abroad as a result of a very profitable and in-demand atmosphere in the sector.

Investing in something, be it in a single apartment or a major building, is something to consider carefully. But Batumi makes it a bit easier by offering so many options that it makes the old adage “don’t put all your eggs in one basket” a simple guideline of how to invest in Batumi. So, if not all in real estate, what else?

Batumi has undergone serious changes and reforms that have led to the significant improvement of its worldwide image and investment climate, the new stadium only being one of the more recent projects. The hospitality market in Batumi is developing at a fast pace, as increased inflow of foreign visitors, businesspersons and delegations attract well-known international hotel chains like Hilton, Radisson Blu and Marriott International. Tourism at the moment is booming, with more than 80% of tourists coming back again for a visit or even staying permanently in Georgia, and investors have noticed, making up over 33% of investment in Batumi. This is due to the fact that no license is needed for operating a company in the tourism sector, and there is no license fee for opening casinos in hotels with more than 100 rooms. Georgia knows how important tourism is, and treats it as a precious mineral. Once the stadium is finished, tourism will flourish.

With one egg in tourism and the other in construction, another can be placed with energy; specifically, in hydroelectricity. Hydro resources are the most significant natural wealth of the Adjara region, with the hydro power potential of the region strong and within-year inflow distribution of rivers diverse. There are five hydro power plants in Adjara operating under the license of the Georgian National Commission on Energy Regulation. Their overall capacity is 22.2 thousand kilowatts/hour and annual energy generation is 28.5 million kilowatts/hour, which is only 0.8% of the whole potential of Georgia. Five completed and eight on-going international hydro power plant projects are the main focus in the energy sector and, according to experts’ calculations, the potential annual capacity of Adjara is 1000 megawatts, which generates 8760 million kilowatts/hour. Investors are needed in this area in order to reach these heights, and they are on their way, with the energy sector being the leading investment sector in 2017, making 45% of private investments.

Agriculture is a part of any country, and Georgia does not shy away when it comes to this. In the Adjara region specifically, 45% of the population lives in villages and is constantly engaged in agriculture; however, a total of around 50% of the population is engaged in agriculture overall. The land for agricultural purposes in this region alone covers 72,862 ha, including a cultivated area of 10,309 ha, which is mainly used for corn, beans, soybean, potatoes, vegetables, tobacco, and perennial plants - 15,899 ha, citrus - 5200 ha, tea – 5700 ha, fruit - 4340 ha, 54 ha for subtropical persimmon, 80 ha for bay-leaf, 525 ha for others, a mowing area of 7159 ha, pastures 37,759 ha and fallow land of around 1736 ha. It is noteworthy that despite the existing potential of fruit and vegetable production, vegetable growing has subsidiary status and is mainly performed by small household farms.

Only up to 20% of total current demand is produced locally, mainly during the early-summer and autumn period. The shortage is compensated for mainly by import from Turkey, with products such as potato, tomato, onion, cucumber, pepper, garlic and eggplant. Growth in the number of visitors to the region will lead to considerable growth of demand. There is an urgent need for investment in agriculture and food production, considering different factors such as environment, availability of state-owned land for privatization and natural resources, any potential investor has certain opportunities for developing various kinds of successful food production schemes not only limited to fruits and vegetables.

Investment in Batumi is needed for the growth of Georgia. Looking at the near future and movement of investors, there is a certainty amongst them that there is great opportunity and potential that they do not want slipping away. The Adjara region is doing great things and is definitely a spot for new and veteran investors to join in fierce and rewarding competition.

By Shawn Wayne