As long as lockdown measures are in place, it is hard to comment on the market response in terms of residential pricing. While the new-built market shows signs of a price reduction, secondary market pricing is still on hold.
A decrease in selling prices could put developers that offer internal installment plans at risk. Particularly in cases when only a small portion of a contract amount is paid, buyers will feel reluctant to continue their payments for already devalued properties. 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.
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. Approx. 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 / 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.