By Kate Tabatadze
Colliers International Georgia has assessed the development trends in the Georgian real estate sector. Managing Director of the global real estate service company’s local representation, Irakli Kilauridze, spoke to Property Georgia about the successes of the past year, as well as the challenges and expectations for the near future.
2016 was an important year for Colliers Georgia. Our total foreign-currency revenues grew by 43%, which constitutes an 85% increase in local currency. Last year, our team of appraisers evaluated more than 2500 units of real estate worth over $600 million in total. The Colliers Georgia development team has prepared business plans for 26 investment projects worth $1.33 bln in total. The company’s construction team has overseen 8 large projects with a total area of 300 000 m2 and a total worth of more than $500 million. With regards to brokerage, Colliers Georgia has rented out more than 10 000 m2 properties, which is a very significant amount for the Georgian market.
From Colliers Georgia’s portfolio of ongoing projects, two large ones stand out. One is the Arakishvili Residence – a project which we are carrying out together with Bank of Georgia. It is developing quite well in terms of marketing and sales. The other is the Class A business centre King David, which will become operational in the first half of this year. We have a long list of companies that wish to rent office space and be represented in this business centre.
We are already discussing several new projects, but we cannot talk about specific details at this stage.
Real estate is one of the leading sectors among those that are responsible for Georgia’s economic growth. How does Colliers Georgia – an international real estate service company – view the development of this vital area? Based on the most recent research of the local market conducted by your company, there are positive growth trends in the hotel sector, and impressive growth has been achieved in tourism. There has been a significant growth in demand for commercial real estate, minor improvement in terms of office space, and naturally, there are numerous ongoing residential real estate projects. Did these trends continue in 2016, and what expectations do you have for the current year?
The tourist and hotel sectors have been developing most successfully. In 2015, we made the bold prediction that the number of visitors to Georgia would reach 6 million in the following year, and our forecasts proved right – the official figure was 5.9 million. Accordingly, the hotel business also did well. There are numerous large and ambitious projects in the pipeline which will enter the market in 2-3 years’ time. Naturally, this will affect the market data, but demand is growing so fast that it will outstrip the supply. This means that there will still be opportunities for developers and investors to carry out new projects. This applies to the 3-star hotel segment in particular.
As for commercial real estate, it was quite an active year for our office market. In this regard, I would particularly highlight the King David business centre, where the process of renting out space is proceeding successfully. Demand is very high, and very soon, this project will be composed of high-level international companies.
2016 also saw positive trends in residential real estate. The number of transactions grew compared to the previous year, and in this regard, I would particularly like to highlight Batumi.
We believe that 2017 will also be a successful year. We might not see the same growth rates as last year, since the devaluation of the national currency towards the end of 2016 significantly affected the real estate market, and still does so. We are expecting a revival in the real estate sector from spring, both in terms of the prices and the number of transactions.
Each year, Colliers International attends two large exhibitions which take place in our region. These are MIPIM in Cannes (in March), and RealExpo in Munich (in October). It is very important for Georgia to always be represented with its investment projects at both these events. Initially, our aim is to attract investors’ interest to Georgia, and then we deal with specific projects. Out of the scheduled 20-30 meetings, 2 or 3 are concluded successfully, which may not seem impressive, but if we take Georgia’s geopolitical situation into account, it is a good result.
Generally speaking, the Georgian real estate market is very interesting for investors. This particularly applies to hotels, where we see a high growth potential in the 3-star segment. There are equally great opportunities in the office sector, as there is still a shortage of high-quality A and B Class business centres on the market.