Georgia’s real estate market has developed a parallel financing channel through developer-provided installment plans, which has reached an estimated GEL 2 billion, according to economist Otar Nadaraia. He warned that these arrangements are almost entirely denominated in foreign currencies, despite the ongoing shift of bank mortgage lending toward the lari.
Nadaraia said developer installments are effectively loans and pose similar risks to foreign-currency mortgages for borrowers who earn their income in lari. Exchange-rate fluctuations could significantly increase their repayment burden.
He also noted that Georgian housing prices have risen faster than consumer inflation. While this is a signal worth monitoring, he said the market does not currently show the same warning signs seen during Georgia’s 2005–2008 property boom or Greece’s real estate crisis.
