Why invest in real estate in Tbilisi?

avatar_Why invest in real estate in Tbilisi?

A beautiful and attractive city - Strong rental demand - High yield

A rental investment in Tbilisi is an interesting choice that allows you to weigh the pros and cons between a very good liquidity and a very attractive rental yield. One of the first elements to consider for any real estate investor is the level of economic dynamism of the investment destination.

Making a real estate investment in Tbilisi means choosing an economic capital city of a small country that opens up to the world, full of dynamisms, charms, breathtaking landscapes, and which allows great hopes for the future. The capital is the real engine of the country's growth (+ 5% forecast for 2018 and 2019). It is an attractive city for foreign companies and investors from all over the world. It is a cultural and architectural attraction, a city with an oriental and at the same time deeply western face. A sense of hospitality and a renowned gastronomy, many cultural facilities with its museums, theaters, operas, cinemas, theaters, parks and gardens... and it is also the main university city of the country, place of destination of Georgian students but also foreigners.

One third of Georgia's total population lives in Tbilisi, which is estimated at 1 300 000 people. Georgia, a country with an ultra-liberal regime, is enjoying a new attractiveness, after two difficult post-Soviet decades and a very strong increase in tourist numbers since 2014, + 15% per year. It is also one of the countries the most open to immigration in the world. 

Tbilisi's housing stock in the historic districts of central Tbilisi, a mixture of traditional Italian-style wooden houses and late 19th century Haussmanian architecture, is old. But it is being rapidly renovated and modernised thanks to heritage preservation policies and tax incentives from the Georgian government. These districts attract the rental investor because they represent a sure value.

Tbilisi is a real estate market with strong short-term rental demand, particularly throughout the year. Rents are the highest in Georgia, and prices are rising for both rent and sale, 25% since 2017. A properly located property in Tbilisi will gain in value over the years and can be sold easily.

A dynamic real estate market - safe real estate investments - high rental yields, are positive elements if you wish to invest in Tbilisi.

Strong rental demand boosted by booming tourism sector

Tourist numbers are growing strongly in Georgia and Tbilisi. The structural deficit in the number of beds in the hotel industry is increasingly encouraging individuals to make the choice of rental investment. The arrival of short-term rental websites, such as the Airbnb platform, is a very new and growing market for Georgia. Many individuals are beginning to make the choice of offering their properties to tourists on seasonal rental in Tbilisi. There are no restrictions as in France on this platform. 

Short-term rental allows higher rental prices, but also high turnover. Long-term rental means lower rental prices, but peace of mind is guaranteed. 

What type of apartment to choose?

We will look for a apartment adapted to your investment which allows to obtain a  highest rental return on investment, while being of an excellent liquidity for its resale. Investing in a studio in Tbilisi is a very good option: small surfaces are synonymous with higher profitability because the amount of the rent per square meter is higher for a small surface than for a large apartment, with equal services. 

We will advise you to choose, according to your budget, for a small studio or 2 rooms type that will allow the best rental yield. Larger surfaces will have to be exploited in colocation to offer you the highest rental return on investment, or, and it is that we seek in priority, properties which authorize a division of the plate in as many small surfaces as possible.

Rental Yield: up to 15% gross depending on the neighbourhood

The average rental yield in Tbilisi is 12% but can reach 15% gross or even much more, if you choose to invest in the old, in some historic areas of Tbilisi, to renovate and to furnish your property. 

Where to invest? Which neighbourhood is the best? Which neighborhood to avoid?

As in all real estate markets, there are areas to favour in order to have an attractive rental yield and other areas for investors who favour the heritage aspect. This depends on each investor's needs, financial situation, objective and investment time horizon.

We have excellent market knowledge and find the best opportunities. We are looking for properties in the districts becoming attractive, with the best living environment, active and well equipped in shops. That is why our target are exclusively the historic districts of Tbilisi dating from the 19th and early 20th century, before the Soviet invasion of 1918. These properties have an undeniable character and are safe values on the market.

The price per square metre obviously depends on the district, the location of the property in this district, the type of building and the property itself. In the central historic districts of Tbilisi, it is obviously more expensive than in the historical districts a little outlying (a few hundred meters, Tbilisi remains a small capital if one compares it to Paris) but still little exploited but already very appreciated by tourists and expatriates. The rental return will be higher than the central districts. 

Gurian Partners only targets these attractive districts. But whatever the neighbourhood, our method to obtain a high rental return will always be the same: buy a property to renovate at the best price. Then to make a good of great quality thanks to a careful renovation and a tasteful decoration.

What is the budget for a real estate investment in Tbilisi?

It's very affordable compared to european prices!  The average entrance fee for a studio of 25 m2, with our company is about 30.000 €, all included (with recording costs, renovation and furnishing) You will have a completely renovated, optimized and furnished studio. This Studio will allow you to have approximately 6.000 € of rental income / year. 

Then, it is possible to invest for larger budgets such as apartments type F2 from 60,000 € to 200,000 €. For investors who have more resources, it is possible to invest in properties from 450,000 to 1 million euros.

Our opinion on the real estate market in Tbilisi

Georgia is an emerging country with key assets. Its strategic position first of all: it is a key corridor at the gateway to Europe, on the new Silk Roads for trade between the West and Asia. Its breathtaking beauty, its liberal economy in full development where everything is done to seduce investors, its cheap prices, its resolutely Western way of life, a millenary culture, make Georgia, from year to year, an interesting destination for the well-informed investor.

The real estate market is booming in Georgia and particularly in Tbilisi. Prices continue to increase steadily. The rental demand is strong due to the increasing influx of tourists in Georgia and will continue to grow and mobilize the interest of investors who will be able to count on a large price growth potential within five years.