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Development Companies Dissatisfied with the Government's Initiative

Development Companies Dissatisfied with the Government’s Initiative

Some construction companies say the government’s initiative will be impediment to the real estate market development – in particular, the obligation to use the national currency in advertising primarily byconstruction companies which specify property prices only in dollars – including in ads.

“A construction company can indicate the price per square meter in any currency, including the dollars, but it must specify  the price in laris as well. As a result, the population dependent on foreign currency will reduce and fluctuations in the lari rate will not have such serious consequences,” – said the Prime Minister of Georgia Giorgi Kvirikashvili.

The representatives of the construction business consider the  initiative very risky and believe  it will  harm thereal estate development industry. According to Director of  the company “RedCo Development” Malkhaz Kunelauri, any artificial intervention in business affairs is always a bad thing.

“The intervention of the authorities in the construction business will cause  great harm. In the local market production of building materials is very limited, basically we have to work with imports, especially when it comes to premium real estate. Companies buy materials  for dollars and  are very dependent on foreigncurrency. To sell the apartments for laris especially in a situation when the rate changes every day is practically impossible. This is a very big risk,” – he says.

He notes that  investors make their money in the construction business in dollars, respectively, they need a profit in dollars.

“The risk is very high. Maybe real estate prices will rise. It depends primarily on the intensity of the devaluation of the lari” – Malkhaz Kunelauri points out.

In the words of  the head of the construction company “Ator” Beso Tkhelidze,  the Prime Minister’s initiative will not change anything in the country, as sales in the construction sector were carried out mainly  in the national currency, and companies buy construction materials in the local market for  the national currency.

“All the building materials, including imported, we buy in the local market for the national currency. We definethe price in US dollars for convenience, but the actual payment is carried out  in the lari. Under the  law,  we have no right to take payment in dollars,” – he explains.

In his opinion, it would be better if the government takes measures to solve other problems faced by the construction sector, for example, problems associated with obtaining a building permitt.

“New regulations are useless and will  hinder the economic development of the country,” – he says.

According to Director of the development company “Archi Group” Nino Gogoberidze, the government’s initiatives will contribute to the growth of sales as they will simplify calculations.

“If this measure is enacted, people will actively buy apartments, as they will not be afraid that tomorrow will have to spend more in the laris  for the apartment bought for dollars,” – she notes.

With regard to the construction business, in some cases the initiative can  hurt it, but on the whole balance will be observed  and will ultimately have a positive effect both for business and for consumers.