The development company Apart Group says that commercial banks have largely halted financing for new construction projects for more than a year, forcing developers to rely heavily on internal installment schemes, a solution that has kept the sector afloat but significantly increased risks.
According to the company’s CEO, Vakhtang Chkareuli, the industry was pushed to find alternative financing sources after banks tightened loan requirements, citing high concentration risks in real estate. Speaking to BMG, he explained that internal installments became the only way for developers to mobilize capital and continue building. “The sector had no choice but to look for a relatively riskier customer to generate financial resources,” he said.
Chkareuli noted that lending terms changed sharply last year. In some cases, developers had to contribute up to 50% equity instead of the earlier 20%, which disrupted the financial model of many projects. As access to bank loans dried up, companies began offering generous internal installment terms, minimal down payments and maximum benefits, to maintain cash flow and sustain construction. “If there was a bubble, it would have burst already. Despite losing financing for more than a year, the sector continues to grow, which means development is sustainable. Construction timelines have simply become longer,” he argued.
However, Chkareuli says the market is currently in “chaos” and requires clear, unified criteria for bank lending. He also believes that developers should be allowed to use buyer funds once a project reaches a certain completion threshold. “Banks already conduct strict monthly monitoring. If a project is 60% complete and passes all checks, it would be reasonable to let developers use accumulated funds,” he noted.
According to TBC Capital, around 70% of primary market real estate sales in Georgia are now financed through internal installments - a trend visible in both Tbilisi and Batumi, where a large portion of lending goes unmonitored. The National Bank acknowledges the issue and is working with commercial banks and business associations to revise lending rules. The goal is to expand access to bank financing for developers and gradually replace internal installments with mortgage loans.
