In an interview with Ambebi.ge, Shota Gujabidze assesses the state of Georgia’s real estate market and construction sector, the dynamics of market development, and the impact of falling prices and the depreciation of the Georgian lari on demand and household purchasing power. The discussion also addresses the role of mortgage lending, the activity of foreign buyers, demand across different housing segments, and the financial position of developers.
The interview also examines the quality of new construction, the problem of uncontrolled development in Tbilisi, the impact of cost-cutting on construction materials and quality, and the difficulties of determining real estate prices under unstable market conditions. You can read this article on "Ambebi.ge": https://www.ambebi.ge/article/147766-kveqnis-mosaxleobis-90-sacxovrebel-binebs-ipotekuri-sesxit-qidulobs/
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I cannot say that the situation in Georgia’s construction sector is enviable: from 2006 to 2008, the sector reached its maximum level of growth, after which a serious crisis began, and from 2012-2013 it started to show signs of recovery again. There were expectations that the real estate market would grow and prices would increase, but the depreciation of the lari changed everything - both prices and the condition of the sector fell to a minimum. It will probably take at least 1-2 years to return to the 2013 level, when the lari exchange rate was stable. I would say that at this stage there is a major downturn in the real estate market, caused by inflation, the general crisis environment, and the decline in people’s purchasing power. Mainly 1- to 1.5-room apartments are being sold, and at quite low prices. Those who have the means are buying inexpensive apartments. As for more expensive property, it is not selling because it has lost value and selling it is unprofitable. One-room apartments in the city center that previously cost USD 45,000 or more can now be purchased for USD 25,000-30,000. This is due to falling prices and the general crisis. I should also mention another characteristic: more apartments are being sold in the suburbs because a larger floor area can be purchased there relatively cheaply. Prices in the suburbs have fallen even further, and such apartments are more affordable for our population, although selling property is difficult everywhere. Developers who had taken out loans are in a very difficult position. Consumers are afraid that apartment buildings under construction may not be completed and delivered, but it is also difficult to sell apartments in newly completed buildings. Today, as in recent years, foreigners are buying apartments with cash. It is true that foreigners were buying property in Georgia before as well, but their motivation is now greater: they can now purchase an apartment even more cheaply. Incidentally, demand from Russia has also increased recently - Georgian emigrants and even local Russians have purchased apartments in Tbilisi. Our local population, however, mainly purchases apartments with mortgage loans. The quality of newly constructed apartment buildings is frequently criticized, and I agree with this criticism: unfortunately, sometimes the quality is not what it should be. Within the next year, we should have a city development plan. Everything seems to be moving toward eliminating uncontrolled construction in Tbilisi, but before this plan is approved and enters into force, some people are trying to urgently purchase the remaining plots of land in the city center and develop them at an accelerated pace. This is why our capital has acquired a distorted appearance.
I know that the materials being used are often of poor quality. During construction, savings are made on materials on which savings should not be made. All kinds of manipulations are used; there are all sorts of construction tricks that result in savings on materials and reduce construction costs. Naturally, apartments in buildings constructed in this way cost less. As a result, there is such confusion regarding prices that sometimes even we ourselves find it difficult to determine what price should be assigned to one square meter of space. Developers often have to sell apartments at heavily discounted prices. For example, in Vake, 1-2 years ago, one square meter cost no less than USD 1,000. In elite districts, it cost USD 1,500-1,800. Even now, there are cases where one square meter is sold for USD 900-950, and sometimes for even less. All of this indicates the difficult situation in the construction sector.