Developer company Arsi says installment plans offered directly by developers have become increasingly widespread in Georgia’s real estate market but carry significant risks. CEO Beso Ortoidze said it is often unclear what criteria companies use to assess buyers’ ability to repay.
Ortoidze said risks are currently limited because demand and prices are rising, but a market slowdown could create problems for developers holding large installment portfolios. He argued that lending should primarily be handled by banks, which have dedicated risk-management teams and can properly assess borrowers’ creditworthiness.
“When a developer does what a bank should do, risks naturally emerge,” Ortoidze said, noting that the sector has discussed the issue with the National Bank several times. He hopes further talks will lead to a more structured model for the market.
Ortoidze warned that if banks later refuse to take over developer installment portfolios because they consider them too risky, the market could face serious disruption or even a collapse. He added that the growing size of such portfolios means developers are increasingly competing with the banking sector, which he considers unhealthy.
