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Residential Sector Yields Quite Attractive Development Returns Exceeding 20% in Successful Cases

EE Real Estate Forum & Project Awards event that gathers industry leaders and potential investors to discuss regions investment opportunities, real estate challenges and innovations.

Interview with Irakli Kilauridze Colliers International Georgia.

Evaluate the level of the investment attractiveness of the region and what segments today are the most interesting for foreign investors?

FDI flows to the economies of South-East Europe and the Commonwealth of Independent States (CIS) declined by 27 per cent, to $47 billion in 2017, the second lowest level since 2005. Most of the decline was due to low FDI flows to four major recipient economies of the CIS: the Russian Federation, Kazakhstan, Azerbaijan and Ukraine. In contrast, Georgia, Montenegro and Serbia posted notable gains; however, these were insufficient to compensate for the losses registered in the larger economies in the group. Prospects for 2018-2019 are moderately positive. It is notable that the source market countries are becoming more diversified. China is becoming an important source of inward FDI in transition economies. Its FDI stock held in the region has increased almost three times in 2011-2016 making it in the top five source countries.

How does participation in international specialized events help attract investment in the region?  

Participation in international specialized events can  be a driver of investor interest. It can provide a venue for accessing the information through industry professionals, identifying new opportunities for business and entrepreneurial activity. The opportunities available in international specialized events are particularly important for developing countries that need to bridge the information gap.

Please describe the investment climate in Georgia and what segments are more interesting for FDI?

Georgia ranks 6th in the World Banks Doing Business Report 2019 which makes Georgia the highest ranked economy in the Europe and Central Asia region, followed by Macedonia (10), Azerbaijan (25) and Kazakhstan (28). Georgia’s FDI focuses on financial sector, energy, construction and transport and communication.

As for property market in Georgia, it is interesting to range of investors from various countries. Middle Eastern investors are particularly active in recent years. The residential sector yields quite attractive development returns exceeding 20% in successful cases. Tbilisi residential transactions grew by 10% in the first half of 2018 compared to the same period of 2017. The rapid growth can be observed in previous years as well.

Hotel industry grows rapidly thanks to over 20% growth in tourism. In addition, the GOP and EBITDA margins are relatively high compared to other eastern European countries. Tbilisi enjoys one of the highest average ADR-s in the region. Thus, hotel developments generate attractive returns of 14-16% on average.

How participation in international events can stimulate FDI?  

International events provide a platform for countries to exchange information about market development trends and investment opportunities. They also create opportunities for direct dialogue between different stakeholders; conducting professional conferences and discussions and the establishing promising business contacts.

Why are you ready to support EE Real Estate Forum and Awards 2018?

EE Real Estate Forum is a conversation starter. It provides a solid platform to showcase country’s development and industry trends. It gives people from across the countries and business the chance to meet and talk with peers and industry partners in a relaxed environment.