Last update: Jul 31
In July 2020, 2,565 transactions were registered in Tbilisi, that is 15% less than the previous year. As for the market value, the figure stands at USD 108 million, depicting a 22% decrease compared to the same period in 2019.
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.
The number of new apartment transactions recorded on premium and medium segments are 54% and 48% less than the same period in 2019, while the same figure for the economy segment has almost recovered, with only a 10% difference compared to July 2019.
The number of new apartment transactions is 20% less than the same period in 2019, while the figure for old apartments has almost recovered with only 5% difference when compared to July 2019.
We have divided the residential market into the following price segments: Economy, Medium, and Premium. We have further analyzed the base scenario with moderate isolation until the end of 2020.
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 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.
*Distressed Real Estate with potential to increase prices
Economy - Apartments < $800 per m². Private Houses - < $70,000
Medium - Apartments $800 - $1,200 per m²; Private Houses - $70,000 - $200,000
Premium - Apartments +$1,200 per m²; Private Houses: > $200,000
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.