Galt&Taggart publishes a report on Tbilisi Residential Real Estate. According to the document, in Nov-23, the number of apartments sold in Tbilisi stood at 3,300 units, down 14.9% y/y (-0.8% m/m). The key reason of this drop is last year’s high base. Like in previous months, apartment sales on the primary market experienced the smallest decrease (-6.1% y/y), while sales on the secondary market were down 21.4% y/y. Significant decline in secondary market sales suggests the end of a speculative buy-to-rent period in the real estate market, as rental rates and yields started moving down, returning to healthy levels.
In Nov-23, increase in apartment sales was observed only in Nadzaladevi and Didube districts, driven by sales predominantly on the primary market.
Other noteworthy features of the market remained unchanged, such as the dominance of medium-sized apartments (51-80 m2), due to affordability and the ease of renting, and rising share of midscale/upscale segments, driven by rising prices.
Cumulatively in 11M23, the total number of apartments sold in Tbilisi reached 36,283 units, showing a 7.3% y/y decrease (attributed to a record-high base). However, this still represents a 12.0% increase compared to 11M21, still indicating robust demand in the real estate sector.
Prices
In Nov-23, primary market prices sustained a consistent monthly rise, while prices of new projects on the secondary market showed a declining trend. It is also expected that newly granted EU candidate status for Georgia will have a positive impact on Tbilisi real estate prices in the near future.
Market size
In Nov-23, the total market value of apartments sold in Tbilisi stood at US$ 239.1mn, down by 8.1% y/y, driven by reduced sales. In contrast, total market size increased 10.4% y/y to US$ 2.7bn cumulatively in 11M23. This growth is mainly due to the rising prices in the primary market, compensating for the decrease in the number of apartments sold.
Rent
In Nov-23, price for renting an average apartment (50-60 m2) in Tbilisi stood at US$ 11.4 per m2 (+6.6% y/y). Notably, rents are down by 5.4% since Mar-23, when they reached all time high. We expect gradual reduction in rents to continue in the near future.
Construction permits
Area of issued construction permits increased by 37.1% y/y in 11M23. Notably, there were significant increases recorded in Saburtalo and Isani districts (+142.2% and +164.8% y/y, respectively). In Saburtalo district, substantial growth is related to the increased projects on the University/Mindeli streets and Lisi areas.
Sales
Galt&Taggart divided real estate sales into three categories:
1) Primary sales – real estate sold directly by construction companies/developers
2) Secondary sales in new projects – real estate sold by an individual owner in projects built
by construction permits issued after 2013
3) Secondary sales in old projects – real estate sold by an individual owner in projects built
