On November 15, 2023, Galt & Taggart presented the results of its latest research at the Residential Real Estate Conference. The conference was attended by industry players, investors, representatives of international financial institutions and governments.
The Galt & Taggart study answers three pressing questions in the Tbilisi residential real estate market: are the factors affecting demand healthy, is there a threat of oversupply of real estate, and what do real estate prices reflect. One of the innovations within the framework of the study is a survey of 15 system developers by Galt & Taggart, as a result of which the sales dynamics of their 65 ongoing projects were analyzed. This allows for a high-precision assessment of current market trends in real time.
According to the study, demand in the Tbilisi real estate market is divided into two main categories: 1) need-based purchases, which are determined by fundamental factors (such as urbanization, family size, etc.) and 2) investment purchases, which are determined by rental income and capital gains. In addition, the factors included in these two categories are analyzed in detail in the study, and along with Georgia’s indicators, the dynamics of these indicators in Europe and neighboring countries are provided.
In terms of residential real estate supply, the Galt & Taggart study examines in detail the statistics of permits issued for residential buildings in Tbilisi since 2015. This information, together with a survey of developers, allows for a real-time analysis of demand/supply. As a result of this analysis, it was revealed that 82% of multi-apartment buildings built with permits issued from 2015 to 2022 have already been sold. In addition, 95% of apartments in the projects of the surveyed developers, which are scheduled for completion in 2023, have been sold. Based on the above and taking into account healthy demand factors, there is no threat of oversupply in the residential real estate market in Tbilisi at the current stage. It is also worth noting that, despite the recent slowdown, sales of the developers we surveyed increased slightly in January-September of this year compared to the same period of the previous year. In addition, the volume of permits issued reached a record level in the first 10 months of 2023, and if this trend in issuing permits is maintained, then the issue of oversupply may become relevant in the medium term.
As for real estate prices, which were largely stable in 2010-20, a noticeable increase began in 2021. This was initially the result of rising prices for construction materials, which was accompanied by rising wages and increased demand due to the influx of migrants. The latter has created strong demand for apartment rentals and led to an unprecedented increase in rental income, which in turn has further increased demand for real estate. As a result, real estate prices in all districts of Tbilisi have increased significantly in 2021-23, and currently the minimum offer price in developer projects is almost $900, while 2 years ago the same figure was around $600. Considering healthy demand factors, a potential slowdown in migration, and an analysis of supply, real estate sales prices are expected to stabilize in 2024.
“The real estate market in Georgia is constantly relevant, and in recent years, interest has increased even more, given the growth of yields and strong demand. Our goal is to respond to current issues in a timely manner. Today’s conference also serves this purpose, to share with market players the views of industry analysts on the current situation, challenges and prospects. We believe that timely meetings with industry players and sharing our analytics and expectations are important, especially at a time when unanswered questions have accumulated,” said Levan Shavkatsishvili, General Director of Galt & Taggart.
For additional information, please visit the website: www.gt.ge
