Investing in real estate in Georgia
Georgia is famous throughout the world not only for its mild climate, amazing views of nature, friendly people, and delicious cuisine. This country is no less known for its high speed of economic development, one of the softest tax laws in Europe, as well as investment attractiveness for foreigners. Apartments, houses, hotels, office premises – these are not only types of real estate, but also profitable investments of free finance for those who are interested in the profitability and liquidity of investment objects.
If you intend to invest assets in Georgia, we recommend that you read our review. In 7 minutes of reading the article, you will learn:
- what is the situation in the real estate market of Georgia against the backdrop of socio-political instability in the world;
- in which sector of real estate is it more profitable to invest today;
- what to look for when choosing an investment object.
Georgian real estate market during a pandemic and a difficult political situation in the world
Before the COVID-19 pandemic, Georgia’s tourism segment was developing steadily. This allowed the owners of apartments, hotels, and houses to receive a good income from renting them to tourists. For example, the owners of apartments in the ORBI CITY complex (Batumi, first line) rented out housing and received $500-800 a month. Even after paying 5% income tax for 5-6 months of the high season, a fairly decent amount accumulated. Investment growth for apartments in ORBI CITY was more than 13% per annum.
During the pandemic, the situation has changed somewhat. A state of emergency was introduced in Georgia. The flow of tourists has decreased, or rather, almost completely dried up. This has affected the real estate market. And during the first half of 2020, there was a sharp decline in house prices.
But very soon the situation stabilized. A critical increase in the facts of infection was not recorded, and the borders were open to tourists. The real estate market also began to recover. Already by November 2020, the volume of investments in real estate increased by 3%. Over the year, this figure returned to the pre-pandemic levels.
The temporary drop in real estate prices has become a great opportunity for investors. No pandemic lasts forever. Prudent businessmen are aware of this and have managed to invest free funds in real estate in Georgia. A year later, on each square meter, they were able to earn 20% of the purchase price. So investing in Georgia real estate helped them make capital.
Later, during the full-scale Russian invasion of Ukraine, the demand for real estate in Georgia increased significantly. Since February 2022, there has been a keen interest in apartments, hotels and houses, both from Ukrainian and Russian investors. People, fleeing the war, turned their gaze not only towards the EU. Georgia turned out to be an equally attractive destination for immigration:
- the cost of living is low here;
- there is no language barrier, as many Georgians speak Russian;
- Citizens of Russia and Ukraine can enter Georgia without a visa, and when buying real estate, you can get the status of a residence permit within a few days;
- when buying a home in Georgia, the competent authorities are not interested in the nature of the investor’s funds – no one will ask where the buyer of the apartment got the money for such a purchase.
This was facilitated by the fact that you can buy real estate in Georgia remotely, and then transfer it to a management company for subsequent leasing.
These facts confirm that the liquidity of various real estate objects in this country does not decrease even under the influence of various socio-political and financial factors. And investing in real estate in Georgia is a great way to save and increase your savings.
What Georgian real estate to invest in?
Several investment directions are popular with foreigners. Each potential buyer can choose their own option:
- Hotels, inns, apartments. Tourism in Georgia is booming, so investing in real estate in Batumi and other cities will be profitable. Potential investors for a high payback should choose apartments, which will subsequently be rented out, in a favorable location. For example, an apartment in the ORBI CITY complex (Batumi, first line) is distinguished not only by its excellent location – proximity to the sea. Moreover, this property boasts excellent internal infrastructure, which is important for the formation of rental prices.
- Offices in large cities of Georgia of numerous branches of international companies are located. Therefore, comfortable modern office space for rent brings a good rent. There is always a demand for them.
- Trading areas. Favorable tax legislation allows businesses to develop steadily. But not all businessmen are ready to devote themselves entirely to entrepreneurial activity. Some investors are more interested in passive income from renting out commercial space. And in order for the profit to be really significant, it is important to choose the right object – to buy retail space in a large residential complex with high traffic of visitors. For example, you can buy retail space in the ORBI CITY complex in Batumi for subsequent renting it out as a pharmacy, clothing store, or beauty salon.
Apartments in a new building or from an old fund?
“Starting” investments in Georgia, many businessmen find themselves in a dilemma – to invest in a new building or pay attention to the budgetary secondary market.
In Batumi, real estate investment is offered by a large developer. In the ORBI CITY complexes, you can buy apartments at the project. The price for sq. m. in an unfinished new building can be a third lower than the cost after putting the house into operation. It is important that a large developer strictly follows the schedule, so the investor receives their apartment for use exactly at the time specified in the contract. The rent from renting such housing reaches $10,000 a year. The return on investment, respectively, is possible in 5-7 years. Do not forget about the high liquidity of apartments in new buildings. They are bought much more willingly than housing on the secondary market. At the same time, it is not necessary to deal with issues of buying and selling or renting. The management company ManCo will take care of the execution of transactions in real estate. We help our clients to purchase apartments and earn money by selling or renting them out. A trustee can close all the necessary legal nuances, and the transfer of the real estate to a management company allows you to forget about any hassle. The investor only needs to make a monthly profit.
The secondary housing market in Georgia is no less dynamic. It is very popular to buy small apartments of 40-50 square meters for their subsequent delivery to tourists. They are cheaper than in new buildings and can be profitable from the first day of ownership. However, the liquidity of such real estate is lower than that of the “primary”. This is due to the rather dilapidated housing stock in large cities of Georgia.
We offer a simple comparative analysis to make it easier for you to understand the pros and cons of investing, both in a new building and in an object of the secondary market:
- Price at the initial stage. Investing in primary housing during the construction phase is interesting at a reduced price per square meter. Primary housing after putting the house into operation is characterized by the highest price per square meter. Secondary market – the cost of square housing is in the middle of the two previous indicators.
- Liquidity. Apartments in new buildings are always easier to sell than housing in an old house. Unless you are selling apartments in a historic building in the city center. But this option still needs to find a buyer.
- Yield. Speaking of profit, do not forget that at the initial stage you will have to invest in real estate. In the case of a new building, in the decoration and furnishing of the premises, and when buying an apartment from the old stock, it is also highly likely that communications there will also have to be repaired. The cost of repairing an old fund apartment may be lower, but even a good finish does not always increase the liquidity of such real estate.
- Infrastructure. Most modern residential complexes can boast of excellent arrangement of the local area and developed infrastructure. Even at the design stage, in this case, every little thing is thought out – up to the location of benches, a playground, a checkpoint, and so on. Houses of the secondary market cannot boast of a well-groomed guarded house territory, good parking, and convenient access to roads. This also explains the fact that investments in Batumi are most often directed to new buildings.
At the end of the review, whichever option you choose, we would like to once again dwell on the benefits that investment in Georgian real estate provides:
- Low cost per square meter for Europe. At the same time, the quality of the real estate fully complies with international standards.
- When calculating, they do not require proof of the origin of funds.
- Credit. An investor can take out a mortgage on the property. This applies equally to non-residents, even without a residence permit.
- Yield objects. Real estate brings up to 15% of profit per year.
- Taxes. When buying a home, tax is not paid. Tax on rent is 5% per annum, 1% is property tax per annum.
- You can purchase an apartment in one day through a representative or in person. All issues will be taken care of by the ManCo management company. We help our clients to purchase apartments and earn money by selling or renting them out.
- When buying a home in the amount of $ 100 thousand, you can get a residence permit for a year, in the amount of $ 300 thousand, you receive a residence permit for 5 years.
- Utility rates are among the cheapest in Europe.
Judging by all of the above, Georgia remains a promising investment destination in Europe.
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