On 21-23 September, as a part of an informational tour held in Azerbaijan’s capital city of Baku, AS Georgia – a subsidiary company of AS Group Investment, the largest development holding in the region – hosted representatives from the media.
The main profile of the AS Group Investment holding is commercial and residential real estate development. In 2016, to diversify its investment portfolio, the Azerbaijani holding began building the Absheron AgroPark, which covers 12 ha of land, and is to be developed into a 140 ha territory.
The AS Group Investment portfolio currently includes large-scale real estate projects such as the Renaissance Palace premium residential complex in Baku, the Villa Sienna settlement of premium-class villas in Baku (4.6 ha), and Dirsi Tbilisi, a city within a city, which will be developed from 10 ha to 47 ha.
Founder of AS Group Investment Shahin Movsumov spoke to Lika Kardava of Property Georgia about the holding’s future investment plans.
- As the largest investor in Georgia and founder of the AS Group Investment development holding, which has invested up to $200 million on the Georgian market over 7 years, how would you assess the investment potential of the real estate sector in Georgia?
The investment climate in Georgia was at its formation stage 6-7 years ago, when we first entered Georgia. Today I see great potential, and I am delighted with our choice. Initially, many people in Georgia and elsewhere thought that our project was overly ambitious, overly big, and that we would not be able to realize it and achieve sales. Nowadays, many companies are building large-scale complexes. At the time when we were forecasting the investment parameters, we were looking at the direction in which the country was developing. I must say that the potential is indeed very high, and in spite of a change of government, everything is provided for the development of the economy and tourism. If these policies continue, it will definitely lead to an increase of investment potential in the real estate sector.
We always keep an eye on statistics. We note an increase in activity on Airbnb from Georgia. Real estate rental has become a lucrative business. The flow of tourists is growing substantially each year. As you know, real estate is not only about sales, but also rental – short term, long term, hotels, aparthotels. Based on the fact that all these areas are developing successfully in your country, I view the Georgian real estate sector with a lot of optimism.
- If we were to compare the real estate sectors in Georgia and Azerbaijan, what are the best practices that can be shared based on the example of these two countries?
Georgia and Azerbaijan differ from each other in terms of population and the economy. We are an oil producing country, so its not surprising that construction is booming in Azerbaijan. Following the disintegration of the USSR and the signing by Heydar Aliyev of the ‘Contract of the Century’ between SOCAR and the Western Oil Consortium in 1994, the real estate sector started booming. Georgia has experienced many difficulties and political changes, but it has ultimately chosen the path of European integration, free economy and business. Therefore, these are two different models of different countries.
Business is also developing fast in Azerbaijan. The scale of construction is large compared to Georgia, because we are an oil producing country. The state is investing in real estate and construction, and is operating several programs designed to replace old homes with new ones. In short, the country is booming.
In Georgia, the trends are different. As in Europe, market development and price increase happens gradually. I think that the development is proceeding in the right direction. Banks/financial institutions and mortgage loans are operating successfully. They are the main drivers of this sector – without them, the real estate sector cannot develop. There are more people employed in the business sector, salaries are rising, and people can pay more in the banks, which also stimulates the development of our business. The banks are developing well, and there is a healthy competition between them. The Larization process and long-term mortgage loans of up to 25 years have been beneficial.
Development of the Georgian real estate sector has a lot of potential with regards to attracting foreign investment.
- What are your middle- and long-term plans in Georgia?
The Dirsi project is only one part of the ‘City Within a City’ mega-development. By the end of this year, we will present a new project that will cover 47 ha in area and will be designed for 25-30 thousand residents. Dirsi currently only occupies 10 ha. The future project will be interesting for the expats, as well as local residents and young people. We are always looking ahead, and have very ambitious plans.
5-6 years ago, people considered Dirsi to be unrealistic. Now we are starting a project that is 4-5 times larger than Dirsi. It will be implemented in several stages, and total investment will exceed $1.5 billion.