The real estate market was thrown into a tumultuous state when the Covid-19 pandemic struck. Between people losing work and being afraid or unable to move, the year in lockdown made a significant impact on the market.
Even as life regains a sense of normalcy, there are several factors that will continue to impact housing prices, buyer behavior and the real estate market in general. York Towers share their expert predictions for the future of the real estate market through the end of 2021 and into 2022.
1.Urgency to buy residential real estate.
Looking ahead in residential real estate, we see again increased urgency to buy as people in our country are still mostly staying home and working remotely, due to the current and expected waves of Covid 19 cases. As it was just recently announced the Georgian government will subsidise mortgage loans for families with newborn children and multi-child families starting September 1.
As Mr. Amr Alabwaz the CEO of York Towers has stated with Forbes, summarizing the impacts of the similar program last year, the programme did play an important role on the residential market, it supported mortgage growth and consequently the sales. Mortgage portfolio increased by 12.1% YoY over 2020 at constant currency terms, almost fully driven by the mortgages in national currency strongly supported by the mortgage subsidy program. As of December 2020 share of subsidized mortgages made up around half of total new issuances. Share of mortgages in residential real estate transaction value in Tbilisi exceeded 50% in the second half of 2020, as subsidy program supported mortgage growth and real estate sales. However, finalization of the subsidy program posed risks to the continued recovery of the real estate market, especially if economic recovery got delayed. In such a scenario we spoke that the restart of the mortgage subsidy program would become needed and therefore more likely.
Considering the effect of the previous programme this shall defiinetely play a major role in increasing the urgency to buy.
As reported by the York Towers sales representatives, they’ve experienced a surge of interest and mortgage requests, as well as this trend of urgency on their projects the previous year, and are projecting to see the same increase of demand, especially on one of their ongoing projects n Batumi. Al Mare Multifunctional premium class residential complex located on the first zone from the sea, close to new boulevard, offers apartments from 23sq.m to 113sq.m. Hence accommodating the demand for larger families (one of the programme requirements), as well as the smaller apartments that would fit into the limits of the programme.
2.Demand for single family homes will increase.
Nowadays, along with prevalent environmental issues and the year of the pandemic that has further sharpened attention on healthier living, the citizens demand green buildings promoting health, energy efficiency and resource conservation.
The demand is relatively high for isolated, suburban housing with green spaces and yards nearby. As a result, companies have begun to respond to the rising demand by offering more green projects.
We are seeing an increasing number of green settlements and primary homes emerging in areas outside Tbilisi and other nearby towns offering greener options to the residents.
The new Lisi Town (and Tabakhmela) projects by York Towers, located at the shores of Lisi Lake on 41.8 hectares, and in Tabakhmela village are announced to be eco-friendly and protected settlements of private houses meeting all requirements of the modern urbanisation low-density development. The projects also envisage parks, sports grounds, children's entertainment areas, and various consumer facilities tailored to the needs of the residents. This unique locations and landscape provide ecologically clean, healthy and a quiet environment for families.
Evidently, sustainability practices steadily gain more importance in Georgia and the real estate space offered by York Towers incorporates more and more green and eco-friendly elements.
3. The Use Of Technology Will Drive Value Of Assets
We also predict that developers and owners will increase their interest in using technology to drive the value of their assets. It is going to be about looking for more ways to use technology to drive positive financial and climate outcomes.
York Towers are currently negotiating with various local and international providers of smart home technologies and are planning to make the houses even smarter.
4. Home Sales Prices Are Still Rising
In July, the recent information available to us average price of residential properties went up by 12.2% YoY and stayed above its 2019 level by 2.7%. Monthly Average Sales-weighted USD prices for new and old apartments also went up considerably in July 2021, especially YoY. In July 2021, average sales-weighted price of new apartments surpassed its 2019 level by 1.5%. In the same period, old apartment sales weighted average price reached 685 USD, the highest monthly figure for the last three years (+7.5% vs 2019).
For the remainder of 2021, considering the inflation pressures and the increase in sales boosted by another subsidy programme, we expect further increase in sales prices.
Notwithstanding the currency fluctuations and the inflation pressures, as well as the upward trend of the market prices, York Towers have kept the pricing on the real estate offered stable.
