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New Safety Regulations – Higher Real Estate Prices?

A part of developers states that the mentioned regulations have increased construction costs. Tornike Abuladze, Arci development company executive director and Georgian Developers Association representative, explained that introduction and enactment of this 600-page document is a right decision, despite a certain part of materials may rise in value.

«This 600-page document comprises articles that genuinely raise real estate value, but there are also articles that do not affect prices. For example, there are some elements, when, for example, a door must open outward in movie theaters or theaters or public places, not inward, to prevent its blockage during conflagration or panic. There are various things that are very expensive, but other things are not expensive», Abuladze noted.

If we want to follow the European course in this respect, then this document should be adopted, he said.

Ministry of Economy finished working on safety technical details in autumn 2015. In that period the department invited all developers and discussed the issue jointly with them. None of the developers read the document in that period, Abuladze pointed out.

“Consequently, we have not received any offer from developers about what to change and what to simplify.  After this, Ministry of Economy approved the document in December 2015 and the document came into force on January 1, 2017. After the regulations were enacted, development companies received the current reality”, Abuladze noted.

Regarding the issue, Ministry of Economy invited developers and asked recommendations in February 2017, he added.

«We are trying to correct this problem, when we have encountered it. At this moment, several meetings have been held at Ministry of Economy with specific recommendations that are under discussion currently», Abuladze said.  Malkhaz Kunelauri, projects manager for RedCo development company, noted that the introduced safety norms comprise many such regulations that did not exist previously and this fact has raised expenditures in development sector.

The issue is of installation of high-quality and top-standard firefighting systems, including at residential blocks. «Such materials as extinguishing systems are very expensive. Consequently, this factor raises value of property. As a result, real estate sales process goes heavier. At this stage, designing works are being carried out under new standards. Consequently, calculations are prepared now. We expect real estate prices to rise, but we do not know how much», Kunelauri said.

Archil Jakeli, founder of Iveroni development company explains that introduced technical regulations have not made effect yet. However, in the future real estate value may slightly rise. Firefighting materials are of comparatively higher value here, while their imports will considerably increase real estate prices.

«Currently, we are developing new projects. Consequently, calculations are being prepared now. We do not know precisely how much real estate will rise in value», Jakeli noted.

As reported, in 2016 Ministry of Economy explained that technical regulations were developed, because in Georgia  Soviet-period outdated norms and regulations were used for planning and building structures and those regulations could not satisfy the modern requirements and safety standards.

Therefore, Safety Regulations of Buildings and Structures were prepared, based on International building Code (IBC) (as part of USAID economic prosperity initiative (EPI)), on the ground of best international experience for planning, building and maintaining of building and structures.

«Objective of safety regulations is to ensure minimum requirements for attaining public health, safety and general welfare thanks to exit means, sanitation conditions, due illumination and air-conditioning, protect life and property from fire and other threats, provide safety of firefighters and rescuers during emergency situations.

In that period Ministry representatives used to say that Safety Regulations of Buildings enabled to replace a major part of Soviet-period norms and regulations and technical regulations of other countries.

“Technical regulations in Georgian language  will promote improvement of operation of architects, engineers, licensing and supervision administrative  bodies and experts”, Ministry of Economy representatives noted.

Georgian Government approved technical regulations for Safety of Buildings on January 28, 2016 by resolution N41.