Tbilisi: $830 per sqm - average price for your home

Georgia’s capital city is experiencing positive development, note international real estate experts from Colliers International.

The global commercial real estate advisory company released a report on the state of Tbilisi’s real estate market, its gaming industry development potential and other industries vital to the country’s economy.

Developments in Tbilisi had driven growth in different areas, for example, growth was observed in the retail market where the area of land occupied by shopping centres grew by about 30 percent, noted the report. Similarly, growth was observed in the office market, where in recent years, the amount of land occupied by businesses in Tbilisi grew by 15 percent.

Demand for hotels was also on the rise. Demand did not meet supply in Tbilisi as the number of tourists had increased while there were still few hotels in the city, stated the report.

In addition, the price of purchasing residential property in Tbilisi also increased, and now amounted to about $830 USD per sqm.

The country’s gaming industry, restaurants, sport facilities, the water entertainment industry, health and well-being and beautiful parks in Tbilisi played an important role in developing the entertainment market in Tbilisi, Colliers International said.

Retail Market

The total retail space in Georgia’s three main cities [Tbilisi, Kutaisi and Batumi] amounted to around 1.1 million sqm, out of which 80 percent was concentrated in Tbilisi, the report revealed.

During the last two years the area of land occupied by shopping centres grew by about 30 percent and currently amounted to 292,000 sqm.

Colliers International noted growth was mainly driven by developments in capital city Tbilisi. Retail played a big part in the developments, and this was evident in 2012 with the opening of Tbilisi Mall – the country’s first large modern mall. Looking ahead, another shopping centre facility named East Point, located on the outskirts of the city, is scheduled to begin operating at the beginning of next year.

In central Tbilisi prime high street rent for shop was around $60 USD per sqm, which exceeded the cost of similar retail spaces in other Eastern European cities (Tallinn, Riga, Sofia, Tirana,Vilnius, Bratislava), but was 27 percent less than the average Central and Eastern Europe (CEE) figure.

Colliers International noted the estimated prime retail yield in Tbilisi was 13 percent for shopping centres and 12 percent for street retail, which significantly exceeded average Central and Eastern Europe figures of 8.6 percent and 9.1 percent respectively.

Tbilisi Mall – Georgia's first large modern mall opened in 2012.

Office Market

In recent years the amount of land occupied by businesses in Tbilisi grew by 15 percent. Currently, the business sector occupied 183,312 sqm in Tbilisi, noted Colliers International.

Prime rent in Tbilisi for office space reached about $21 USD per sqm, which was equal to the average Central and Eastern Europe figure.

By 2014 the average modern business centre vacancy rate in Tbilisi stood at around seven percent. This rate has been "declining gradually” after peaking in 2010 at 25 percent, said Colliers International.

Total modern stock in Tbilisi accounted for 334,800 sqm, of which 151,486 sqm (or 45 percent) was owner-occupied. Big companies in Tbilisi preferred to build office buildings themselves that were specifically fitted to their needs rather than rent an existing space in a business centre, noted the report.

Pixel Center is the first internationally recognised Class A+ building and the first environmentally progressive working space in Tbilisi. Photo by N. Alavidze / Agenda.ge

Hotel Market

During the past four years the number of non-resident visitors in Georgia increased annually by 30 percent on average, said Colliers International. At the same time, the number of international tourists to Georgia experienced an average annual growth of 21 percent.

These figures peaked in 2014, where Georgia hosted a total of 5.5 million international visitors (holidaymakers, business officials and people in transit), which included 2.2 million international tourists, who spent time in Georgia.

Fast growth in demand for hotels in Tbilisi coupled with slower hotel room growth (5 percent annually), resulted in increased occupancy rates, especially in Tbilisi where brand hotels now achieved an average occupancy of 75 percent, said Colliers International.

Georgia’s signing of the Association Agreement (AA) with the European Union (EU) would have a positive effect on the country’s development, said Colliers International. The deal, signed in June 2014, aimed to expand political and economic relations between the two parties and to gradually integrate Georgia into the EU’s internal market.

During the next few years we expect significant growth in the MICE (Meetings, Incentives, Conferences and Exhibitions) segment, while numerous workshops and conferences will be organised in the framework to implement the Association Agreement,” read the Colliers International report.

By mid-2014, seven international hotel brands [Sheraton, Radisson Blu, Marriott, Marriott Courtyard, Holiday Inn, Citadines Apart-Hotel and Best Western] were represented in Georgia’s capital Tbilisi. Despite this number, the share of international upscale brand hotel rooms in Tbilisi was only 11 percent, and international mid-scale brand rooms occupied 17 percent of total supply.

Tbilisi Marriott Hotel. Photo by N. Alavidze / Agenda.ge 

Residential Market

Almost 2.9 million sqm of land was currently under construction in Tbilisi for ongoing and pipeline residential projects. During the next two years supply will rise by 16,000 dwelling units and amount to 360,000 dwelling units. In the last two years, strong demand has resulted in stalled projects being resumed, said Colliers International.

Registered purchase transactions were also following a positive trend in Tbilisi, stated the report.

The average growth rate of selling transactions during the past three years reached eight percent in Tbilisi. The volume of registered transactions in 2013 amounted to $829 million USD. In 2014 transaction volumes increased by six percent in Tbilisi ($882 million USD).

The average residential real estate selling price in Tbilisi grew from $826 USD per sqm in Q1 2012 to $830 USD per sqm in Q4 2014.

Entertainment Market

The Government of Georgia was actively supporting the development of the country’s gaming industry, which would give Georgia a competitive advantage in the region.

Colliers International noted the gambling industry accounted for about 70 percent of the entertainment industry’s total turnover, which equalled 1.2 billion GEL in 2013.

Several projects in this sphere are planned for the city in the next two years. Creation of the Tbilisi Fine Art Museum, refurbishment of the Tbilisi Opera House and relocation of Tbilisi Zoo are the major planned projects.

The Government of Georgia is actively seeking to hold international sports tournaments in the country and some of them were already planned, such as the European Youth Olympic Games 2015, the UEFA Super Cup 2015, the Chess Youth Olympiad 2015, the Junior World Wrestling Championship 2016, the European Under 19 Football Championship 2016-2017 and the Handball Men’s Youth World Championship 2017.

The country’s main stadiums and sports complexes are concentrated in the capital (Boris Paichadze Tbilisi Dinamo Arena, Mikheil Meskhi Stadium and Tbilisi Sports Palace) and this will be exaggerated in the future following the development of new sporting facilities, such as a new rugby stadium and a new tennis complex.

The restaurant market was heavily developed in Tbilisi, noted the Colliers International report. Photo by N. Alavidze / Agenda.ge

The water entertainment industry (waterparks and swimming pools) is actively being developing in Georgia, said Colliers International. The recently opened Gino Paradise Euro Park were the country’s main facilities in this field. Completion of a new swimming pool for the European Youth Olympic Games 2015 is planned.

Health and well-being is becoming more popular in Georgia, particularly in Tbilisi, which experienced a boom in the number of fitness centres and other health-related facilities opening up in recent months. The report noted Aspria Fitness was actively expanding its chain, and now had four branches throughout the capital.

The major amusement park of the city was Mtatsminda Park. Tbilisi also offered a botanical garden, zoo and several recreation parks. The relocation/expansion of Tbilisi Zoo and renovation of Mziuri Park are the major planned projects in the near future.

In terms of destinations, Tbilisi was one of the most visited parts of the country. Red-tiled roofs, narrow streets and ancient buildings, as well as a few examples of modern architecture, impressed visitors from around the world. Tbilisi also offered unique cuisine, a gambling facility as well as sport and leisure opportunities.

The restaurant market was heavily developed in Tbilisi. The city boasted hundreds of traditional eateries however more modern café-bar scene, night clubs and international cuisine market was growing fast, said the report