National Bank of Georgia says demand on residential real estate on rise

Georgia Materials 22 February 2023 10:18 (UTC +04:00)
National Bank of Georgia says demand on residential real estate on rise

Demand for residential real estate across Georgia is increasing along with prices on houses and flats, the National Bank of Georgia said in its latest real estate sector study, Trend reports with reference to Agenda.

The study has projected supply in the market of the capital city of Tbilisi to “increase significantly in the near future” according to the construction permits issued between 2021-2022.

However, it also notes the number of permits issued in the Black Sea city of Batumi has decreased in the wake of “significant risks” posed to tourism by the Covid-19 pandemic.

The share of transactions by foreign citizens in the total transactions of real estate purchases in Tbilisi increased to 8.8 percent in September 2022, however the NBG said the figure was still below the maximum of nine percent, registered in July 2019. It said a majority of buyers were Georgian nationals.

The increase in transactions by foreign citizens mainly came on Russian nationals, the study also showed, with their share in transactions for houses or flats in Tbilisi marking an increase from 0.9 percent in January to 5 percent in October, and from 5 percent in January to 17.6 percent in November in Batumi.

Citizens of Russia with Georgian origins are more likely to buy residential space in Tbilisi than in Batumi”, the NBG pointed out in comments in the figures.

The National Bank of Georgia said the rise in residential real estate prices had “several fundamentals”, involving both demand and supply factors.

It pointed out increased demand allowed development companies to raise prices, while expenditures comprised under the prime cost had also increased for the enterprises this year.

The average price of residential space in Tbilisi increased mostly on flats delivered with the main structure in place, but without cosmetic touch-ups applied - the condition known in the domestic sector as the “white frame”.

The NBG also said the average price increase of “white frame” flats had increased by 46 percent between early 2022 and September, rising from $1,200 to $1,752 per square metre in the Vake district of Tbilisi.

In Batumi the price of flats in the “black frame” condition - which includes just the exterior walls, windows, entrance door and utilities - increased by 52 percent, to $1,073 per square metre.