Economist Otar Nadaraia says around 62% of residential property pricing in Georgia is based on the lari, despite the widespread perception that apartments are priced in US dollars. This means that when the lari strengthens, apartment prices rise in dollar terms, while depreciation tends to push dollar-denominated prices down.
Speaking on the Real Estate Prospect program, Nadaraia said understanding this dynamic is essential for the financial security of both developers and homebuyers. He warned that developers borrowing in dollars face significant currency risks: if the lari depreciates, their dollar debt remains unchanged while the dollar value of their property assets may fall.
The same risk applies to individuals who earn salaries in lari but use foreign-currency developer installment plans. Although most bank mortgages are issued in lari, the parallel market of developer-financed installments has reached approximately GEL 2 billion, with many agreements denominated in foreign currencies.
Nadaraia said Georgian apartment prices have risen faster than consumer prices, which is a warning sign of potential overvaluation, although the situation has not reached the critical levels seen in 2005–2008 or in Greece. He also pointed to geopolitical risks: the war in Ukraine and migration inflows contributed to stronger demand, with migrants occupying approximately 40,000 apartments in Tbilisi. An end to the war or an outflow of migrants could put pressure on the market, particularly given the record expansion in construction and housing supply.
