TBC Capital published a report on Residential Real Estate in Tbilisi. According to the document, Tbilisi residential market reached new highs in August 2022.
As of the report, the number of transactions exceeded the previous month figure by 1.8%, whereas in YoY terms, the difference was significantly higher (+26.9%). The average asking sale price increased by 8.6% MoM, while the growth amounted to +26.5% relative to the same period of 2021. After a gradual decline since May 2022, asking rent price reversed the trend by reaching its highest point so far and surpassing the previous month figure by 7.9%. In YoY terms, the growth constituted +79.2%. The rental yield slightly declined in August 2022 relative to the previous month (-0.1 pp), as sale prices showed higher growth than rent prices.
The nominal appreciation of GEL against USD (2.5% MoM, 11.0% YoY) was one of the factors positively affecting sale and rent prices in August. Also, the data on border crossing, non-cash expenditures and account openings in Georgian banks by non-residents, suggest that migrants will stay longer in Georgia than it was previously anticipated. Prolonged duration of the war, economic sanctions against Russia and full suspension of the visa facilitation for Russian citizens by the EU could potentially trigger new waves of migrants to Georgia. Consequently, we might observe additional pressure on RRE market demand in the future.
In August 2022, 737 new apartments were sold, which was 18.5% more than in the same period of 2021. As for old apartments, the annual growth in sales was even higher, amounting 29.3% YoY. In MoM terms, sales of new residential properties increased by 39.6%, while there was a slight decline observed for old apartments (-4.8%). As a result, the share of new units in all sales decreased by 2 pp compared to August 2021, however in MoM terms, the share increased by 5 pp.
Average asking sale prices for properties of all conditions showed a notable increase in both MoM and YoY terms. The highest growth was recorded for green frame, +19% MoM and +32.1% YoY. Traditionally, the average asking sale prices were the highest for newly renovated apartments (1,221 USD per SQM), followed by green frame (1,140 USD per SQM).
In August 2022, the number of transactions, was higher compared to the same period of 2021 in all districts except Nadzaladevi, which basically stayed at the same level. The top 3 districts with the largest YoY growth of transactions were Didi Dighomi (+80%), Krtsanisi (+79%) and Saburtalo (+38%). Other districts showed more modest growth in sales. Regarding the shares in total residential property transactions, Didi Dighomi (20.1% of total) took the top for the first time, followed by Saburtalo (19.4% of total), whereas Krtsanisi, Chughureti and Mtatsminda still stood at the bottom, together accounting for about 7% of total sales.
Sale prices exceeded the 2021 figures in all districts. YoY changes in prices were more homogeneus compared to number of transactions. The highest YoY increase in sale prices was observed in Saburtalo (+31%), Gldani (+30%) and Nadzaladevi (+28%).
Rent prices still stood at significantly higher levels compared to last year, with YoY growths exceeding 60% in all districts. In MoM terms, only Chughureti showed negative growth (-1%), while in other districts rents grew by more than 5.5%. The top 3 districts by rental yields were Didi Dighomi (13.2%), Didube (12%) and Isani (12%).
It seems that August 2022 was not as active as initially expected for Tbilisi Airbnb market. The number of active listings declined further in August compared to the previous month (-2.5%). The figure remained below the pre-pandemic level (-29% vs August 2019). The number of properties booked at least once also posted a MoM decline (-3.7%), widening the gap with 2019 figure (-41%). Furthermore, the number of nights booked fell behind the 2019 level by 25%.
Due to the lower supply, the occupancy rate improved in August, exceeding the previous month and pre-pandemic level by 4 pp and 37 pp respectively.
Even though there was an improvement for total market revenue in MoM terms (+1.8%), the YoY figure went back to the negative growth territory (-13% vs August 2019). Considering the recent situation and the possibility of further increase in immigration, flat-sharing market might repeat the trends observed in March-May 2022: some Airbnb owners switching to traditional (long-term) renting, reducing the supply of Airbnb properties on the market.
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