Market Highlights from the Real Estate Market Laboratory

In terms of sales, the Georgia real property market grew by 10.6% in 2017, in comparison with 2016. An annual increase was observed in all quarters, with the highest jump in Q2, 14.2% (QoQ) and 20.0% (YoY).

TBS, with a 40.7% share in total sales in 2017, dominated the Georgia real property market. The TBS market was followed by Adjara, with 11.6%, and Kakheti, with 9.9% shares in Georgia sales. Adjara experienced the highest annual increase in sales number (34.1%). With an 84.3% share, real estate market growth in Adjara was mostly driven by an increase in transactions recorded in Batumi (32.4%).

In 2017, TBS real property sales grew by 15.6%, while overall the market outside TBS grew by only 7.5%. More than half of Georgia sales were registered in the three largest cities: TBS, BAT & KUT.

For 2017, the TOP 3 regions by sales in Georgia were:

TBS (39 801 units, 40.4%)

Ajara (11 471 units, 11.6%)

Kakheti (9 790 units, 9.9%)

For 2017, the TOP 3 districts by sales in Tbilisi were:

Saburtalo (9 995 units, 25.1%)

Vake (7 282) units, 18.3%)

Samgori (3 994 units, 9.9%)

REAL PROPERTY SUPPLY

804 new buildings with total area of 1,244 thousand sq.m were completed in Tbilisi during 2017. The real property supply in Tbilisi grew with respect to number of buildings (+5 % YoY), but declined with respect to total area of buildings (-13.9% YoY).

For two consecutive years, the supply of properties increased in the 3rd quarter of each year.

Growth in total supply has been driven by a 12 % growth rate (YoY) in the supply of commercial buildings (179 units with total area of 411 k sq.m). 625 units with a total area of 832 K sq.m have also been added to the residential property supply in Tbilisi.

RESIDENTIAL PROPERTY PRICES

IGHLIGHTS

In 2017, Sales Price Index (SPI) for residential properties mainly trended downward, with only a slight increase in Q4 17 (0.2% QoQ). Rent Price Index (RPI) also moved downward after slight increase in Q2 2017 (2.2% QoQ).

During 2017, Average Sales Price (ASP) varied between USD 791and USD 866 per sq.m (quarter average), and Average Rental Price (ARP) was between USD 7.0 and USD 7.4 per sq.m (quarter average). After reaching the highest point in Q1 2017, both ASP and ARP have trended downward, except for Q4 2017.

Due to the new law requiring pricing of real estate in GEL, prices in local currency stabilized starting in Q3 2017, while prices in USD became more volatile, reflecting exchange rate fluctuations.

In 2017, the most expensive and cheapest districts of Tbilisi were, by ASP: Mtatsminda (USD 1,012) and Gldani (USD 535); by ARP: Mtatsminda (USD 8.5) and Gldani (USD 4.3)

Compared to 2016, ASP declined in almost all districts of Tbilisi, while ARP was more stable.

COMMERCIAL PROPERTY PRICES

After a stable increase of SPI for three consequent quarters, a high point of 1.100 in Q2 2017 was reached, but it has been trending downward since. The largest decline was recorded in Q4, -16.4 % (QoQ) and -23.1% (YoY)

Seemingly, RPI started to decline only after Q3 2017, reaching 1.020. The highest increase of RPI was recorded in Q3, 2017, at 7.4% (QoQ) and 10.8% (YoY).

During 2017, ASP varied between USD 1,032 and 1,074 per sq.m, and ARP between USD 9.4 and USD 10.4 per sq.m. Average ASP for commercial properties in 2017 declined by 3.2%, and dropped to an historical minimum of 1,032 USD per sq.m in Q4 2017.

Likewise, ARP in 2017 declined by 2.8%, and dropped to an historical minimum of 9.4 USD per sq.m in Q4 2017.