Investing In An Unstable Region Is Associated With Risks – Galt & Taggart
Kakha Samkurashvili, senior analyst at Galt & Taggart, considers that despite the growing demand for the real estate, market is volatile. According to Samkurashvili, on the one hand, expensive money and on the other, war factor does not create expectations for the implementation of new projects.
"The year started positively; the sales rate was quite high in January-February. But, in March we already have new data due to the war. The first thing that affects the real estate market is the exchange rate, which affects the customer's purchasing power and the value of the materials. The exchange rate leads to inflation and as a result, the National Bank increases the refinancing rate, it raises the interest rate on mortgage loans in GEL. All this has a negative effect on the market, but despite this, the dynamics are good, we see rental fees are up due to the high demand.
The main problem during this period is instability, as prices are fluctuating for commodities on the international market, energy prices are growing which raise production costs, therefore it affects the local market and it is difficult for the developer to calculate the project expenditures.
The fact that the demand for rent increases uniquely has a positive effect on the value of real estate as an investment product, but the second factor is the political instability that accompanies this process, these two factors work against each other. Investing in an unstable region is associated with risks and that is how foreigners perceive us today. If the war is not over, it will be difficult to say how investors' expectations will change," Samkurashvili said.
