Jus as with new residential buildings, the demand for used apartments has also declined in Tbilisi. In the first case, bank regulations aim to restrict crediting volume. In another case, apartment sales declined because of high prices.
Zurab Eristavi, a representative of the Georgian National Real Estate Association, explains that the prices of new and used apartments per square meter have almost evened. If a person sells an old apartment in Saburtalo for X price, almost the same prices with comparatively higher tariffs can be seen for apartments in new residential buildings.
Companies have introduced internal installment schemes. Consequently, everybody tends to buy new apartments.
Demand for used apartments has declined for the following reasons: despite how good the apartments are, previous and current living standards differ considerably. Today, at least two WCs are required for a family. This factor was ignored in old apartments. Dining rooms are very small in older apartments, and that’s why the demand for old apartments has declined.
Problems arose after the restriction on mortgage loans, too. As a result, developers decided to offer better conditions, and this factor became a precondition for the reduction of competitive capacity on the secondary market”, Eristavi said.
Representatives of the Real Estate Agency declare that frequently the price difference between a new apartment and an old apartment differ little, and therefore, buyers are losing interest.
Representatives of the Kibe real estate agency say that sales of used apartments have decreased. “Used apartments frequently require repair work. There are a few repaired, used apartments, and their prices are equal to the price of recently built new apartments.
Frequently, 60-75% of buyers show a preference for new apartments, because they prefer a new space which is ready for overhaul work, even more so in a new residential building.
The fact is that only a small number of people do not trust new apartments, while in major companies, the prices are higher. Consequently, consumers cannot pay higher prices and they have to buy old ones.
According to their explanations, in this case, residential buildings are seriously important. They examine where the building has additions, how stable it is, and so on. Each client has his own priorities. The prices of used apartments are declining on an individual basis. About 10%-15% do not lower apartment prices categorically, and consequently, the apartment sales process continued for months.
“The demand for old apartments is reported in Saburtalo, where there are apartments with a high ceiling and thick walls. They do not have elevators, but the majority of them are not multi-storied structures.
There is a very low demand for Khrushchovkas. I would say this demand does not exist in practice. Apartments may be in good condition, but the quality of a resident in the building is the worst. Similar apartments cannot raise the interest of potential buyers if they learn the building has additions. Big apartments with more than 100 square meters of space are also sold with great difficulty”, KIBE representatives noted.
Tornike Abuladze, the executive director of the ARCI development company and a representative of the Georgian Association of Developers explains that the demand for old apartments has declined because of certain reasons, including the comfort of acceptance of the idea of a of a new apartment.
‘When you have decided to buy an apartment, you visit some specific developer, and you are offered not one apartment, but 8-10 various possibilities. Which one do you prefer? It is more convenient to buy an apartment from a private person than to examine 50 apartments separately. This is very uncomfortable. Therefore, it is strange, but one of the key factors as to why buyers prefer to buy an apartment under construction is the simplicity of a decision”, Abuladze noted.
Citizens buy old apartments for two reasons: 1) they prefer to move to the purchased apartment on the same day, or in no more than 1 month and secondly, they avoid waiting for the completion of buildings under construction, he said.
Abuladze explains that the 2018-2019 statistics are very interesting.
“I believe old apartments will be sold and the market will lack new ones because of regulations, which has narrowed the supply of new apartments. As to prices, if the price of a new apartment grows, prices of old apartments also rise. And we see that the price of new apartments is growing, because new regulations have made the construction process more expensive”, Tornike Abuladze pointed out.