The real estate market is the fastest growing area because, unlike stocks and bonds, real estate is a tangible asset that investors can control. Real estate investing is a way to build long-term wealth because real estate prices rise significantly each year, resulting in capital and net worth growth over time.

Real estate values increase with inflation, providing a competitive edge against the currency's declining purchasing power over time.

Real estate was the most attractive for foreign investors, after financial and insurance activities. In terms of investment attractiveness, the real estate sector is in second place - with 406.9 million, which is 20% of the total FDI.

By the end of 2022, foreign direct investments made in Georgia by country amounted to 2,097,898.1 USD, and in 2023, it decreased significantly and amounted to 1,594,746.9 USD.

Vake is one of the most developed and prestigious districts in Tbilisi, which is why the median price of 1 m2 in the segment of newly built (completed) apartments at the end of 2021 was 3540 GEL, and at the end of 2023 - 4900 GEL. It is the prestige of the area that caused the price change, which maintains the upward trend. According to the data of 2022, the number of residents in Vake is 11% of the population of Tbilisi.

2023-2024 Summary (Galt & Taggart - Investment Research Data)

Number of apartments sold

In 2023, 39,949 apartments were sold in Tbilisi, which is a 7.0% year-on-year decrease, and this decrease is connected to the record high base of 2022. However, it should be noted that apartment sales are still 7.7% higher than in 2021. Importantly, the decline in 2023 was entirely due to a 13.5% annual decline in the secondary market, as the positive dynamics of sales in the primary market was maintained and an annual increase of 1.6% was recorded.

In February 2024, 3,444 apartments were sold in Tbilisi, which is an annual increase of 0.9% after the 6.3% annual increase in January. This increase was entirely due to increased number of transactions in the primary market, while sales in the secondary market decreased by 7.5% year-on-year.

Prices

In 2023, the dynamics of price growth was maintained. In addition, the annual growth rate of the apartment price in the primary market was twice as high as the price increase in the secondary market (+21.3% and +10.0% y/y, respectively). The minimum price of an apartment for sale in Tbilisi is currently up to $900 m2, while this figure was $600 m2 by the end of 2021.

In February 2024, the dynamics of housing price growth in the primary market continued (0.8% monthly and 16.5% annual growth), while prices in the secondary market decreased (-4.1% and -2.2% monthly decline for new and old projects, respectively).

Market size

In 2023, 2.9 billion US dollars worth of apartments were sold in Tbilisi, which is a 9.9% year-over-year increase despite the reduced number of transactions.

In February 2024, apartments worth 258.8 million US dollars were sold in Tbilisi, which is an annual increase of 4.9%. The largest contributor to this growth was the primary market, driven by a combination of increased transactions and prices.

Rent

By the end of 2023, the rent of an average-sized apartment in Tbilisi amounted to 10.7 USD per square meter, which is an annual decrease of 5.1%. Despite this reduction, this rent is more than double the 2021 level.

And in February 2024, the apartment rent was 9.9 USD per square meter, which is a monthly decrease of 4.8%. It should be noted that rents have been reduced in all districts of Tbilisi.

Building permits

In 2023, 255 construction permits were issued in Tbilisi for a total residential area of 1.9 million m2.

In the first 2 months of 2024, 29 new permits were issued for the construction of residential projects. The total residential area of these permits is 200,445 m2.

Results of a survey of system developers by Galt & Taggart

A survey of 13 system developers was conducted in January 2024, covering 68 ongoing construction projects. The purpose of the study was to eliminate the issue of late registration of sales in the primary market and to be aware of the latest trends in the market.

Based on the research results:

• In 2023, the total number of apartments purchased from developers increased by 4.2% annually, underscoring the steady demand in Tbilisi's real estate market.
• A sharp increase in developer sales was recorded in 2022, which stabilized in the first 9 months of 2023. Notably, after this stabilization, developer sales accelerated again in Q4 2023, surpassing the average of the previous three quarters by 21.9%.
• Among the projects completed in 2023, almost all apartments are already sold. In addition, almost half of the apartments in the projects whose completion date is 2026-28 have already been sold.