The opening of three new malls in Batumi will increase the current gross leasable area (GLA) in shopping malls threefold, - TBC Capital notes in a new report on Batumi Commercial Real Estate.
Currently, four modern shopping malls are operating in Batumi (Batumi Mall, Metro City Forum, Black Sea Mall and DS Mall). By 2025, at least three new malls (Grand Mall, Orbi City and World Trade Center) will be opened in the city. According to the largest real estate developers the future supply of shopping malls might be even higher.
"Vacancy rates, which remained stable in 2020, started to rise in parallel with the expanding GLA. According to TBC Capital estimates, vacancies will reach 24% in 2025 due to the accelerated supply.
Weighted average rents in Batumi’s modern shopping malls fell drastically during the pandemic (-37% YoY in 2020). The temporary closure of malls, drop in tenants’ revenues, rental holidays provided by malls and turnover based lease agreements were the main factors that led to this decline. However, rents fully recovered after the pandemic and stood at 18 USD per SQM in June 2022.
Considering the opening of new high-end malls and positive economic outlook in the region, we expect weighted average rent in Batumi’s shopping malls to increase by 19% YoY in 2023 and additional 26% in 2024-2025", - the report reads.
