374 residential developments are currently under construction, projects that will enlarge Tbilisi’s residential supply by 2.6 mln sq m in residential space and by 38 K in units of flats.
The number of newly-built residential transactions dropped in Kutaisi and Tbilisi by 24.5% and 7.4%, respectively, while Batumi saw a massive 35% growth, mainly caused by delivery of large-scaled development project.
The weighted average price of premium newly built flats in Batumi is higher than in Tbilisi.
The major trends seen in Georgian residential real estate show that the performance of the market has fallen in Tbilisi, as the number of transactions, as well as the market size decreased in 2019. Due to changes made to the mortgage regulatory system and because of the currency depreciation, significant changes were observed in the market of newly-built flats. Despite challenges placed on the market prices did not experience a significant fluctuation.
Unlike Tbilisi, the mortgage regulatory changes did not affect Batumi’s residential real estate market, as a large portion of the demand there comes from foreigners. In fact, there was a significant increase in the number of transactions. In line with these, the weighted average price grew remarkably, attributed to the significantly increased number of transactions recorded on premium category flats. It is notable that Batumi’s real estate market is converging with that of Tbilisi in terms of the volume of transactions recorded on premium newly built units. Further, the weighted average price of flats in the premium segment is significantly higher than in Tbilisi.
The projections are negative for the medium segment residential market in terms of the number of transactions and prices. However, this will most probably boost speculative transactions in this category due to decreased prices.
Batumi’s residential real estate market is more exposed to the crisis posed by Covid-19. The increased demand for newly built flats in Batumi was attributed to foreign citizens purchasing residential properties there. In line with reduced tourism figure and spending power in the source markets, the demand for Batumi’s residential properties is expected to drop significantly.
In order to support the residential real estate sector, the government of Georgia announced its fourth anti-crisis plan, in which the government will subsidize 4% of the interest rate of mortgage loans for five years. The subsidy will be issued for loans not exceeding 200,000 GEL and will only apply to those taking mortgages for the purchase of residential apartments that are newly built or under construction, from 1 June 2020 to 1 January 2021. The state will also ensure the completion of ongoing construction.
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