By Kate Tabatadze / Editorial Director of Property Georgia
Buying Stocks, opening savings accounts - People with some extra money now can find an alternative usage of their finances and invest in real estate. Dr. h.c. Sascha Ternes, Managing Partner/Founder of TERNES Real Estate Fund, speaks about the benefits this world-famous investment practice has to offer and what change it can make in Georgia.
- Saving in real estate is new for Georgian market, could you please name the top benefits why people should make this choice?
TERNES Real Estate Fund, which I established, is the only company of this kind in Georgia. It’s a platform for people willing to co-invest in real estate. Lots of people are not satisfied with bank deposits lately since interest rates have gone down; they’re looking for different options to put their money in. Some people purchase apartments but this does not come without related problems, people have to face issues like unfinished apartments, renovation, finding tenants - lots of administrative headaches. We take all these issues in our hands. Mainly we invest in commercial properties (offices) and the investors have two benefits: every year they get dividends from the rent income and the market price of the property increases over the years, so that there is an upside profit potential when selling the property upon maturity of the Fund.
- Who are your investors? High or low-middle income people?
Not everyone may have enough money to buy a property to rent it out. Our company is a collective investment solution where all investors are welcome to participate, regardless of size. The individual minimum participation amount depends on the specific project. For instance, one project that we’re running now requires a minimum of $60 000 investment capital. Entire idea is that after a certain period of time, especially when market prices have gone up, we’re selling this property and generate a considerable profit for the investors; normally the maturity of the Fund is 7 years.
- How big is the interest from Georgians towards your company, since what you’re doing is something new for the local market?
There’s a big interest both from locals and foreigners. We have investors coming for example from Germany, Switzerland, Austria, United Kingdom, Ukraine, Turkey, Azerbaijan - still the majority are foreign citizens. Maybe, it’s because investing in real estate is a well-practiced business model abroad while in Georgia we still have to create more awareness, that this asset-backed investment opportunity is very secure and profitable.
- What’s the scale of your portfolio? Is it more capital-focused or do you have activities in regions as well?
Our activities are based in Tbilisi since here we have the segment who is ready to pay a decent price for rent while in regions this still remains a problem. Hope the regional development in Georgia will further improve and we’ll have the opportunity to expand our business in the regions as well.
- How attractive is the Georgian market for foreign investors?
If you take a look at the economic environment in the region, you’ll see that currently Georgia performs better than most of the countries around. The other thing is that lots of foreign investors have interest in emerging markets, considering that part of them exit from Russia and Ukraine and are looking for alternatives, Georgia is a nice option. Overall, the profit yields for Georgian real estate investments are probably 3-times higher than in Western-Europe.
