Galt & Taggart says that growing use of in-house installment schemes in Georgia’s real estate sector increases systemic risks, and that the ongoing decline in construction permits should be maintained to help ease pressure on the market.
The IMF has also raised concerns about rapidly expanding “quasi-mortgage” financing offered by developers. According to the report, such schemes should potentially fall under broader financial supervision if they are deemed to function as financial intermediation.
Galt & Taggart’s Zuka Tavkelishvili notes that strong competition among developers has led to the widespread adoption of flexible internal payment plans, including cases in which buyers can purchase apartments with little or no upfront payment. While this has supported demand, it has also increased risks for developers outside the traditional banking system.
He adds that the recent decline in construction permits, now in its seventh consecutive month in Tbilisi, is a positive signal and should continue. According to him, a coordinated approach between developers, banks, and regulators is needed, though direct regulation of developers may fall outside the National Bank’s mandate.
