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Residential

1.
Apartment Transactions in Tbilisi by weeks, 2020
2019
Before crisis
Recovery

2.

Updated: December 21, 2020

In November 2020, 2,760 transactions were registered in Tbilisi, that is 3% higher than the previous year. As for the market size, the figure stands at USD 116 million, reflecting an 8% decrease compared to the same period in 2019.

Apartment Transactions and Market Size (USD, mln) in Tbilisi,
November 2020 vs. 2019
Transactions
Market Size

3.

Updated: December 21, 2020

The number of transactions recorded on medium and premium new apartments is 26% and 49% less than the same period in 2019. As for the economy segment the number of transactions has increased by 14% and amounted to 2,318.

Transactions Distribution of New Apartments by Segments in Tbilisi,
November 2020 vs. 2019
Nov-19
Nov-20

4.

Updated: December 21, 2020

The number of new apartment transactions is 17% lower than the same period in 2019, while the number of transactions registered on old flats has decreased by 26% and accounts for 7,816 units.

Apartment Transactions Distribution by types
Jan-Nov 2020 vs. 2019
New Flats
Old Flats

5.

Updated: December 21, 2020

In the period Jan-Nov in 2020, the market size of new flats is 22% less than the same period in 2019 and accounts for USD 753 million, while the figure for old flats is 27% lower and amounts to USD 309 million.

Market Size Distribution by types, Jan-Nov 2020 vs. 2019
New flats
Old flats

6.

Updated: December 21, 2020

The weighted average selling price of new flats in the period of January-November 2020 is USD 671 per sq m, reflecting a 5% decrease, when compared to the same period in 2019. As for the old flats, the WAP accounts for USD 636 per sq m, depicting an insignificant 0.5% decrease.

Weighted Average Selling Price by Types in Tbilisi,
Jan-Nov 2020 vs. 2019
New flats
Old flats

7.

Updated: December 21, 2020

In the period Jan-Nov in 2020, the market size of new flats is 22% less than the same period in 2019 and accounts for USD 753 million, while the figure for old flats is 27% lower and amounts to USD 309 million.

Transactions Distribution of New Apartments by Districts in Tbilisi,
Mar 22-Nov 31 2020 vs. 2019

8.

Updated: December 21, 2020

The weighted average selling price of new flats in the period of January-November 2020 is USD 671 per sq m, reflecting a 5% decrease, when compared to the same period in 2019. As for the old flats, the WAP accounts for USD 636 per sq m, depicting an insignificant 0.5% decrease.

Transactions Distribution of Old Apartments by Districts in Tbilisi,
Mar 22-Nov 31 2020 vs. 2019

9.

Updated: June 4, 2020

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.

Transaction and price change forecast in economy, medium and premium housing price segment

*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

Source: Colliers

10.

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.

11.

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.

12.

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.

Expectations and opportunities

Stability of the banking sector and the uninterrupted financing of real estate projects are among the main factors in maintaining the residential property market.
Developers might consider making changes to installment schedules in order to maintain cash flow from existing contracts. It is also unlikely that an aggressive price drop by developers will result in an increase on the market in total.
In line with adapting to a distancing culture, demand for single-family houses is expected to increase. Demand for land plots suitable for single-family house development near Tbilisi, and in other regions of Georgia, is also expected to increase.
Given its adequate response to the pandemic, there is a chance for Georgia to position itself among the safe countries. This can encourage foreigners to acquire property in Georgia with the purpose of long-stay or relocation. An attractive segment to target could be the elderly European population (25% of total European population above 60) and freelancers from the CIS, CEE region, for whom location is not the decisive factor, but rather safety and new experiences.