Low purchasing power is one of the reasons investors are holding back from putting additional capital into Georgia’s retail sector. Levan Karalashvili, General Director of Tbilisi Central, said high lending rates, the capital-intensive nature of retail and the broader political environment are prompting both foreign and local investors to be cautious about opening new outlets.
According to Geostat, the trade sector attracted $41.2 million in foreign direct investment in the first half of 2026. In the first quarter of 2025, the sector recorded negative FDI, with $10 million flowing out, while $23.6 million was invested in the second quarter.
“First of all, the general environment affects this. Unfortunately, we do not have a population with sufficient purchasing power for even mid-range and premium brands to enter the market. Another issue is the lack of platforms. For example, a 100-square-meter store creates an average of five to eight jobs, while investment amounts to around €1,500 per square meter. It is quite capital-intensive,” Karalashvili said.
He added that franchise operators and other retailers are maintaining the status quo rather than focusing on expansion amid uncertainty. “Access to capital has also become more expensive. Borrowing money today comes with high interest rates, driven not only by local conditions but also by international developments. This leads to a more cautious and measured approach, particularly in retail, because opening an outlet and then having to close it after some time would result in significant losses. That is why businesses are being cautious,” Karalashvili said.
