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Real Estate Market Suffering a Crisis

Georgian real estate market is suffering  stagnation, typical for the summer, but this time not only due to  seasonal factors.

Brokers say that recently the business has experienced a difficult time in any season. The number of sales and rentals of apartments  has reduced in Tbilisi. Representatives of the real estate companies say that the prices of apartments in Tbilisi decreased by 10-15% in almost all districts, but even this has not led to a noticeable increase in sales.

The highest price per square meter is registered in the center of the city – about $ 900 instead of 1 100-1 200 as it was a few months ago. The cost of apartments in the districts  surrounding the center is  $ 600-800 per sq.m. According to Director of the real estate agency Kibe Neli Goguadze, the situation may begin to improve in the end of August – as  the company does not focus on selling but on  leasing the  real estate, and this business starts activation in the autumn.

“The real estate market in general is characterized by seasonality. In terms of sales of apartments, problems were expected, but now it’s not just seasonal factors. The problems began a few months ago due to the devaluation of the national currency. Those who are going to buy an apartment decided to wait out the season. The revival of the market needs a serious boost, which is not seen. Accordingly, we will be completely engaged in  rent of apartments, which is activated in the fall,” she notes.

In  her words, to a large extent this is due to the start of study in high schools, respectively, many nonresident students have to rent an apartment. Brokers say that one of the reasons for the decline in demand for the purchase of apartments is explained by a fact that banks issue mortgages in dollars and the population has income mainly in the lari.

They say that  the local population has traditionally sought to buy apartments under construction (it is cheaper), while old apartments are bought by foreigners – especially property in the historic districts of Tbilisi. Brokers’ words are   confirmed by statistics – according to the Civil Registry, in June 2015 the demand in the primary market increased by 15.8 % compared with the same period in 2014, demand on  the secondary market decreased by 5.3%.