In Aug-23, the number of apartments sold in Tbilisi reached 3,552 units, down by 9.3% y/y and 2.8% m/m. Importantly, the primary market had much smaller reduction in sales compared to the secondary one (-1.7% y/y and -14.6% y/y, respectively), - according to the document published by Galt&Taggart.
As of the report, this could indicate a decrease in the appeal of the rental market, as demand has declined from migrants, which was one of the primary factors contributing to the sharp increase in rents last year.
In Aug-23, sales decreased almost in every district of Tbilisi. The only increase was recorded in Didi Dighomi (+17.8% y/y) and Nadzaladevi (+26.6% y/y) districts. Other notable features of the market remained consistent, including the prevalence of medium-sized apartments (51-80 m2) and rising share of midscale/upscale segments due to increased prices.
Prices on the primary market remain elevated, supported also by availability of flexible payment options from developers. Meanwhile, prices reduced slightly m/m (still registering growth y/y) on the secondary market, as demand moderated due to reduced attractiveness of rental market.
Notably, the weighted average prices have displayed substantial growth since the start of 2022, with the following changes by project types:
• Primary projects +39.4% since Jan-22
• Secondary new projects +23.7% since Jan-22
• Secondary old projects +15.3% since Jan-22
In Aug-23, total market size of apartments sold in Tbilisi stood at US$ 257.2mn, up by 9.7% y/y, mainly due to a significant increase in a primary market size (+28.5% y/y), resulted by strong price growth.
The area of issued construction permits increased by 48.7% y/y in 8M23, continuation of upward trend observed since 2020. Notably, number of issued construction permits had a slower growth rate (+20.7% y/y). This indicates a shift towards larger-scale projects in the pipeline. Many
developers are now favoring larger residential construction endeavors, including multiple blocks or, in certain instances, entire complexes.
Methodological note - we divide real estate sales in 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 by construction permits issued before 2013