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Colliers International: Number of apartment transactions in Georgian Tbilisi decreases

Business Materials 3 August 2020 12:40 (UTC +04:00)
Colliers International: Number of apartment transactions in Georgian Tbilisi decreases

BAKU, Azerbaijan, August 3

By Tamilla Mammadova – Trend:

The number of apartment transactions in Georgian Tbilisi decreased by 34 percent in the first half of 2020, compared to the same period in 2019, and the market value decreased by 36 percent, Trend reports referring to the report of Canada-based Colliers International real estate services organization.

The decrease is solely caused by the COVID-19 restrictions, which lasted for about two months.

The total market value in June amounted to $93 million, which is a decrease of 36 percent compared to the same period in 2019.

As reported, market transactions in Tbilisi was least reflected in Gldani district, which is explained by the fact that economy class apartments' transactions increased throughout Tbilisi and in Gldani mainly this segment is presented.

Market value has been significantly decreased in medium-class apartments. Compared to June of the previous year, the total market volume decreased by 62 percent. This reduction was reflected in the economy class apartments at least.

In June 2019, the market value of economy apartments amounted 53 percent of the total market and increased to 68 percent in June 2020, while value of medium-class apartments fell from 34 percent to 21 percent. There is no significant change in the premium class apartment market at this stage.

"The prices of economy segment residential properties are not expected to change significantly, while the number of transactions in this category is forecast to drop. We expect the demand on economy class single-family houses to soar in the isolation period," the report said.

The projections are negative for the medium segment residential market in terms of the number of transactions and prices. Speculative transactions are expected to increase in the medium market due to decreased prices.

"The number of transactions is expected to drop in the premium segment, but we anticipate very little price change in this category. The market of rental properties will be most affected, as both, prices and the number of transactions are expected to drop by the end of the year," the company noted.

As reported, the new-built market shows signs of a price reduction, secondary market pricing is still on hold.

"Based on initial consultations with developers, installment payments have diminished significantly during the lockdown period. In order to regain trust, it is vital for developers to demonstrate an uninterrupted construction process. Banks will have an important role to play in ensuring flawless funding for committed-to projects," the report said.

In the short-term, it is highly likely that the number of transactions will drop, especially in touristic areas such as Batumi, Bakuriani and Gudauri. About 11,500 transactions were recorded in Batumi in 2019, most of which were investment properties. Similarly, property transactions in Gudauri and Bakuriani have predominantly investment purposes.

"The market for investment and rental apartments will face challenges. Significant price reductions are expected for both rental and sale property. On the other hand, this reduction may inspire a new wave of speculative investors who are active during the crisis period," the report said.

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