Georgian real estate market analysis 2021

Georgian real estate market analysis 2021

Before going to Georgia, many watched various videos, saw Georgia news and read a lot of articles about Georgian real estate. The most memorable of this information – beautiful wrapper, in the form of renderings of finished new buildings and apartments. Such is human nature, as judged by the cover. But it often happens that the more beautiful the wrapper, the worse the content.

Meeting developers in Georgia

In the summer of 2018, the first real estate exhibition was held in Batumi, with the aim of attracting investors from neighboring countries. Of course, it’s hard to call it an exhibition. 6-8 stands of local developers were presented, however, in fact, you can’t ask anyone in Batumi – all owners of construction companies, just not everyone wanted to show themselves at the exhibition. And after visiting several developers' offices, it became clear why.

In offices, they often cannot provide accurate information on specific technical issues. For example: how communications will be carried out; what will be the decoration of the walls (external and internal); will there be waterproofing of the façade, roofs and walls, etc.

Quality of new buildings in Georgia in 2020

This is a must see. When you enter a new building for the first time in your life, you can, of course, decide that this is how it should look. But no, this is far from true.

An apartment in a new building should be bright and free of construction waste. Preferably with internal partitions and windows. Of course, we are talking about ready-made, commissioned objects.

For comparison, look what they look like apartments in new buildings in Turkey.

Yes, of course, there are different types of readiness of real estate, but then there is no point in talking in advertising brochures about comparing prices for new buildings in neighboring countries. This – heaven and earth.

The strangest thing is that Georgian developers do not even think about removing the mountains of construction waste in apartments, at least for good photos. All this can be seen on the websites real estate agencies in Georgiaselling such apartments.

As a result, when buying such an apartment, you must spend time cleaning the apartment from everything that the builders left behind, try to wash the windows of cement or paint. Break through a window or door in a room located inside the apartment.

But maybe they will offer you to buy an apartment without walls and an entrance door, just a place on the floor. All this is available on the real estate market in Georgia. The main thing is not to buy “pig in a poke” online. You must see what you are buying and carefully read the contract with the developer.

Real estate prices in Georgia in 2021

Real estate prices in Georgia in 2021. How objective is the price for new buildings and real estate in Georgia? You only need to compare a few numbers to understand why they are overvalued and a bubble has formed.

According to the IMF, global GDP fell by 5% in 2020. This is due to the closure of businesses during the 2020 Pandemic and the shutdown of many markets.

  • If we compare the crisis of 2008, then in 2009 world GDP fell by only 0.08%.
  • According to the Georgian Ministry of Statistics, GDP fell by 5.1% in 2020.

Prices for New real estate in Georgia in 2019 were as follows:

  • black frame - from $550 per square meter
  • white frame - from $1100 per square meter

Considering that in large cities of Georgia the construction business has acquired noticeable proportions in recent years, the main blow from the 2020 pandemic fell on it. The next link in this decline was the real estate market and the tourism business.

Problems of developers in Georgia in 2020

Since most construction projects are pledged to banks, it is not difficult to guess what losses and problems developers now suffer every day.

Those construction companies that can quickly accept the fact of losses will be the first to reduce real estate prices in 2021 in order to maintain some part of the business and pay off interest on loan debt.

Today, by the beginning of 2021, there are already offers from developers at $399 per square meter. in a ready-to-move-in house.

The 2020 pandemic has led us to an economic depression. Having carried out even a superficial analysis of the real estate markets in the world, it is not difficult to see their decline associated with the closure of shops, offices, shopping centers and restaurants, and the almost complete closure of the tourism business in the coming years. Against this background, most of the players in the construction market have already become bankrupt.

Real estate agencies are closing. So how does the situation on global real estate markets differ from Georgia? Nothing. The only worse thing is that most of the developments were planned for rental to tourists.

If the owners of such real estate have not yet realized that “the same as before” will no longer be the case, they are not preparing a new business for themselves, diversifying the old one. This crisis will force prices to come down, otherwise it will be even more difficult for them to accept their losses in 2021-22. And the real estate “bubble” will burst again, as it has happened many times in history, revealing real prices per square meter in Georgia.

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