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Association Of Realtors: Housing Prices Fell By 15%

An interview with the head of the Georgian Association of Realtors Anna Jalagonia

 – How did the lari devaluation affect the real estate market?

– An impact  is certainly  great, but mostly it was not caused by the  lari depreciation , but by  the current instability in the country. The currency rate is a problem that has a very negative effect on the mood of investors and buyers. But the instability of the rate is even worse which means the impossibility of a more or less long-term planning. This prevents an investor who can’t plan  his costs during the next month, and it prevents the buyer who does not know at what rate he  will have to pay for the purchased property in a couple of weeks.

This process has already seriously affected the real estate market. The demand has fallen sharply. Although the construction companies have chosen the right strategy – despite the crisis, they do not deteriorate quality, despite the fact that the situation has a negative impact on expenditure of construction companies  and the prices.

– In which segment a decline in demand is most noticeable – for housing or commercial space?

– The decline in demand is more pronounced for housing, apartments are purchased by  the middle class, which mainly acquires real estate on  credit.

Сommercial space is bought by a completely different category – despite the crisis, they can calculate all the pros and cons, and still buy a property.

The statistics also confirm a decrease in demand for housing; as for commercial space, a situation in this segment is more or less stable.

– What are the property prices in a new reality?

– Construction companies have to declare discounts. Developers prefer discount actions in order to return prices to their previous level in the event of the lari strengthening.

– Did investment in construction decrease?

– If you look at the statistics, the construction sector is mainly financed by domestic resources. There are very few foreign investors who invest in the construction and it is quite clear – investors prefer to wait due to the unstable situation in the country.

– What can we expect in the property market by the end of the year?

– By the end of the year we can get a very unpleasant situation due to both the national currency rate and seasonal factors. Winter and autumn are the most passive in terms of real estate acquisition.

If we add the lari devaluation, the situation can be very unfavorable. However, given the high-quality proposals of our construction companies and their  ability  to adapt to the interests of consumers, we don’t eventually expect the catastrophic results.

– What will be the prices?

– In the primary market discounts are announced for new apartments while in the secondary market prices have already fallen, and perhaps the decline will continue due to the lack of demand. In general, prices for residential real estate fell by about 15% and continue to decline.