Wages in the construction sector have been steadily increasing over the past three years, becoming one of the main factors behind higher construction costs, according to Beso Ortoidze, Director of the development company "Arsi".
He explains that a shortage of skilled labor is forcing businesses to raise salaries, which significantly impacts costs. “Construction is growing, permits are being issued, but due to staff shortages, wages increase almost every year. The sharpest growth in material costs was recorded in 2022, but today, wages remain the main driver of higher expenses,” Ortoidze said.
According to Geostat, in July 2024 the construction cost index rose by 5.6% year-on-year, with wages increasing 22.5% and construction material prices rising 1.5%, contributing 4.53 and 0.92 percentage points to the overall index, respectively. Since February 2022, the index has grown by 25%.
As for real estate prices, Ortoidze does not expect them to decline in the coming years. “Sale prices are tied to cost price. Unless costs fall, prices cannot decrease. Unlike rents, which surged unnaturally in 2022–2023 and had room to correct, sale prices remain firmly linked to construction costs,” he explained.
