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An improving business climate coupled with strong economic growth a significant supply and demand imbalance in many real estate sectors make the former Soviet country of Georgia attractive to investors.

November 2015

One of the most beautiful countries in the Caucasus region, Georgia also has an important geopolitical location at the crossroads of Western Asia and Eastern Europe. Bound to the west by the Black Sea, it borders with Russia to the north, with Turkey and Armenia in the south, and with Azerbaijan to the southeast. Georgia covers a territory of 69,700 square kilometres, and its population stands at about 3.75 million in 2015.


Georgia, as all other members of the former Soviet Union, was struggling to find a new way of development after the Soviet Union’s collapse. Over the past two decades, the country has gone through many political and economic trials and changes which eventually brought Georgia to a new understanding of its potential and perspectives. Nowadays, it offers opportunities in various market sectors, including real estate, to investors from all over the globe.

Between 2003 and 2014, Georgia achieved robust economic growth, averaging a 6.3 percent annual increase following structural reforms that stimulated capital inflows and investment, according to Colliers International. The reforms helped to improve the country’s overall business environment, strengthen public finances, facilitate infrastructure improvements, and liberalise trade.

Growth was also supported by an increase in foreign direct investments and was driven by capital accumulation and the sound use of excess capacity rather than by net job creation, with productivity gains concentrated mainly in the non-tradable sectors. GDP per capita increased from USD 920 in 2003 to USD 3,367 in 2015, as per the Georgian National Statistics office.


Among transitional economies, Georgia has improved its ranking in the Corruption Perception Index from 85 to 50 in the years 2002-2005. The Georgian tax system and procedures for granting licenses and permits were simplified, and customs duties were reduced.

Furthermore, Georgia’s efforts to reduce corruption in public and private sectors have significantly improved its ranking in the World Bank’s Doing Business Survey to the 15th position among 189 countries.

The Association Agreement between Georgia and the European Union, signed in June 2014, includes the setting up of a Deep and Comprehensive Free Trade Area (DCFTA), which allows products or services produced in Georgia to freely access the EU market.

Real estate along with energy, hospitality, manufacturing, logistics and agriculture are the most attractive sectors for investments in Georgia.

“Georgia saw significant development of the real estate market during the last decade, especially of the hotel, retail and residential sectors,” commented Zurab Kananashvili, Colliers International in Georgia. “The most established markets in Georgia are its capital Tbilisi and the Black Sea resort Batumi.”


Thanks to its beautiful nature, friendly people and delicious food, Georgia is becoming increasingly popular among tourists. As a consequence, tourism related real estate development is currently one of the most attractive sectors for investment in Georgia.

Although the tourism boom in Georgia is levelling out, four years of demand growth outstripping supply growth by a wide margin has left the market with ample development and investment opportunities, experts say. During recent years, supply has increased at around a third of the demand growth rate, causing a widening supply-demand gap, strongly increasing occupancy rates and relatively high room rates, according to Colliers. As a result, international brand operators already present in the market are expanding (such as Radisson, Marriot, and Sheraton), and new players are preparing to enter (Intercontinental, Millennium, Hyatt, Hilton, Rixos, Best Western, Park Inn and Golden Tulip).

“From 2003 to 2013 the number of international visitor arrivals to Georgia has grown at an average annual rate of 35% from 300,000 to 5.4 million. Although growth is slowing down, it is anticipated that total international visitor arrivals will reach 6 million this year,” added Kananashvili.

Outside the core markets of Tbilisi and Batumi, modern supply hardly exists in Georgia, resulting in a variety of interesting regional opportunities. These include Tskaltubo Spa Resort in western Georgia – one of the investment projects offered by the government, and mountain resort towns such as Gudauri, Bakuriani and Mestia, which are in an early stage of development.

“Recent success stories, such as Lopota Resort in the Kakheti region and Rooms Hotel in Kazbegi, provide evidence of the significant potential across the country for resort-type and vacation park developments,” commented Zurab Kananashvili. “Georgia’s stunning landscape and largely unspoiled natural environment offer ideal conditions for these types of retreats.”


Until recently, there were no large shopping centres in Georgia, and the retail market in the biggest cities like Tbilisi was represented by traditional small stores. After the opening of the country’s first large modern mall in 2012 – Tbilisi Mall – the next major scheme, East Point, started operations in September of 2015. Currently, retail development is primarily driven by the expansion of modern supermarket formats and an increasing number of fast-food retailers.

“Given the country’s urban structure, the bulk of expansion potential in the Georgian retail market can be found in the capital Tbilisi, the only city with a catchment area of sufficient size and affluence,” said Zurab Kananashvili. “The city’s retail market is undergoing significant changes, driven by increasing competition between retailers and locations. Retailer interest is fuelled by the country’s confirmed orientation towards Europe, its ever improving business climate and strategic location in the region.”

After the current surge in modern supermarket development, researches anticipate that international big box retailers will start to eye this market with increasing appetite.

“The embryonic real estate investment market in Georgia, featuring prime retail yields at around 12-13%, coupled with significant potential for rental increase, opens up a myriad of attractive investment opportunities. In addition, streamlining local property management practices alone will have the potential to add significant value,” further explained Kananashvili.

For the coming years, Colliers predict that the Georgian retail market will continue to offer attractive niches for retailers, developers and investors. With the country embarking on its journey towards integration with the European Union, demand for modern retail formats will continue to increase.


Investment opportunities in the residential sector can be mainly found in the Georgian capital, which impresses by its fascinating panoramic views from different locations and districts over the city.  Tbilisi’s residential real estate market has been characterised by increased demand and supply in the last three years. At the same time, selling prices did not change significantly, according to Colliers.

“Positive demographics, population growth and mortgage lending activities from the banks are creating the improving demand prospects for residential real estate in the long term.  The average living area stands at 23 sqm per capita, also the positive trend of demographics indicates that demand on newly constructed apartments will remain growing tendency and also the Soviet-type refurbished buildings will be replaced gradually,” explained Zurab Kananashvili.

During the recent years, one of the most developed districts of Tbilisi is Saburtalo, where the largest share of development projects is implemented. Colliers noted that the selling price accords to medium segment, which is why the market activity is high. Therefore, the density of the district provides the opportunity for further development.

“Another upward trend of townhouse type constructions started in the city due to positive demand for this type of housing. The developments are mainly represented near recreational zones of Vake, Saburtalo, Krtsanisi and Didgori districts, which benefit from a quiet environment, ecologically fresh air and green territory,” concluded Kananashvili.