Real estate demand in Georgia continues to grow steadily, but rising construction costs -particularly a sharp increase in labor wages - are affecting apartment costs and selling prices. Paata Kokaia, founder of INN Group, told BMG that construction wages have risen by around 40% over the past two years.
Kokaia said demand remains strong across the company’s projects. In Didi Dighomi, where INN Group is developing an 800-apartment complex, around 25% of the units, or about 200 apartments, were sold during the two summer months. In Kutaisi, around 30% of the apartments in the Casamel project have already been sold. He also noted that almost all of the workers employed on the company’s three projects have purchased apartments there, benefiting from preferential terms offered to employees.
Construction costs have also pushed up prices. In Didi Digomi, the cost of an apartment delivered in “white frame” condition has increased from around $900 per sq. m. in previous projects to approximately $1,250 per sq. m. today.
Kokaia believes real estate remains one of the best investment options, with rental yields currently at around 7–8%, above bank deposit rates. He expects the market to maintain annual growth of 4–5%, supported by local buyers, young families and emigrants. INN Group is currently focused on completing around 90,000 sq. m. of residential space under construction in Tbilisi and Kutaisi and does not plan to seek new permits at this stage.
