Decline in Apartment Sales in Tbilisi and Batumi Amid Rising Prices

Apartment sales in Tbilisi and Batumi have experienced a downturn due to escalating real estate prices, although the rate of price increases has decelerated recently.

Leo Chikava, the head of research and data services at Colliers Georgia, detailed the market dynamics to Business Partner. "In June, Tbilisi saw 3,049 apartment sales, marking a 21% decrease compared to the same month last year. Consequently, the market's value shrank by 13% to $212 million," Chikava explained.

The report from Colliers Georgia also highlighted a similar trend in Batumi's real estate market, where apartment sales in June dropped by 19% year-over-year to 1,105 units, with the market value also reducing by 13% to $56 million.

"The first half of the year indicated a downturn. Specifically, Tbilisi witnessed a 3% decline in residential transactions compared to the same period in 2023, while Batumi saw a more significant 17% reduction," Chikava added. He attributed the decrease in transactions to substantial price hikes over recent years and political events, particularly during May and June.

Regarding real estate prices, Colliers Georgia reports that the weighted average price of residential properties in Georgia in 2024 stands at $1,063 per square meter. "In June, prices for both new and old apartments in Tbilisi increased. New construction in the suburbs saw a 12% rise, while central and near-central areas experienced increases of 6% and 4%, respectively. Old apartments saw a 10% price rise in the suburbs and central areas, and a 5% increase in the wider central area. Prices in Batumi also escalated, with new apartments rising by 4% to $1,098 per square meter and old apartments by 2%," Chikava stated.

Industry experts and developers suggest that real estate prices may not rise further in 2024. Given the reduced transaction volumes, there's a possibility that prices could even start to decline. However, predictions remain tentative, as apartment prices are influenced by supply and demand dynamics and ongoing political events.

Another contributing factor to real estate pricing is the construction cost index. According to recent data from Geostat, the construction cost in Georgia increased by 0.3% from the previous month and by approximately 8.5% from May of the previous year, driven by rises in material costs and labor wages.