Why Invest in Real Estate in Georgia
5-minute read
Introduction
The real estate market in Georgia has witnessed rapid growth in recent years. Everywhere you turn in major cities, new constructions are sprouting. Notably, property prices, whether for sale, rent, or lease, have surged significantly. There’s an undeniable domestic and international demand to buy real estate in Georgia. While the perks of living in Georgia are numerous, as detailed in our article “Why Live in Georgia“, there are other objective reasons behind the allure of Georgian real estate. In this article, we delve into the core motivations to invest in real estate in Georgia.
Table of Contents
Consistent Passive Income Stream
Possessing any form of real estate in Georgia, from modest apartments to luxury penthouses, promises a steady passive income. Urban growth, booming tourism, and migration trends mean that there’s a burgeoning demand for rental properties. High occupancy rates translate to appealing rental yields, emphasizing the attractiveness of Georgian real estate. Data from AirDNA reveals a score of 86 out of 100 for Tbilisi’s real estate market. Such a high score demonstrates how well this market is performing, because the score is based on demand, growth, seasonality, regulation, and investability data. According to the same source, the annual occupancy rates in Tbilisi range between 55-77%, and in Batumi between 40-60%, while rental yields in these cities range between 10-20%.
However, above numbers sometimes may not reflect the reality. If the property is intended to be used for rent, there are several factors, including the location and optimal size of the space, that have a paramount importance. If these factors are not considered wisely, the occupancy rates and hence rental yields might be lower. However, if everything is planned reasonably, results can even exceed the expectations. For example, the occupancy rates of the properties managed by Geo-Residency ranged as high as 85 – 98% in 2023.
Capital Appreciation
Over recent years, real estate prices in Georgia have consistently risen, marking it as a reliable investment avenue. Estimating the annual capital appreciation can be challenging due to varying trends from year to year. Furthermore, the type of property, its location, and other elements significantly influence these figures. For instance, between 2022-2023, there was a notable surge in prices. Some properties even saw capital appreciation of up to 100%. However, it is reasonable to assume that such an increase was a bit artificial and was primarily triggered by a massive influx of migrants from Ukraine and Russia. It’s highly unrealistic to expect such steep appreciation rates to continue. In earlier years, capital appreciation was more moderate, averaging around 10-20%. Predicting precise future rates is difficult, but broader economic indicators and Europe’s historic urbanization trends suggest that capital appreciation will likely persist in the Georgian real estate market. However, prospective investors should exercise caution to avoid purchasing overpriced properties.
Diversity
Georgia is a mosaic of varied landscapes, climates, and natural wonders, all harmoniously condensed within its borders. This compact yet diverse geography is what makes Georgia truly unique on the global real estate map. Investors have the privilege of diversifying their portfolios across multiple terrains, from the bustling business hub of Tbilisi, the sun-kissed beaches of Batumi, the snow-clad mountains of Gudauri and Bakuriani ideal for skiing, to the vine-laden valleys of Telavi.
Such a wide spectrum of environments, all within close proximity, is not just a luxury in terms of lifestyle but also a strategic advantage financially. The geographical diversification allows for optimized occupancy rates and robust rental returns, efficiently countering any seasonal lulls. Furthermore, the affordability of acquiring this multifaceted property portfolio in Georgia stands in stark contrast to European counterparts. In many developed nations, attaining such diverse properties within a close radius is either prohibitively expensive or simply unfeasible. In Georgia, however, investors can enjoy the richness of varied real estate, even on a budget, especially when considering smaller apartments across these regions.
Pathway to Georgian Residency
Georgia’s growing appeal on the global stage means many are keen to secure legal residency here. Investing in real estate offers a direct and the easiest route to achieve this. This dual benefit of property investment and eligibility to Georgian residency makes the proposition even more enticing. For a detailed overview of obtaining Georgian residency through real estate, see our article, “Guide to Georgian Residency by Investing in Real Estate 2023.”
Liquidity
Georgia’s real estate boom ensures properties here maintain high liquidity. Well-priced properties can be sold swiftly. Additionally, the mature mortgage market in Georgia means many can buy homes with bank loans, further improving liquidity. Property owners can also use their properties as collateral for contracting various types of loan at local banks which is additional benefit of having such an asset.
No Property Tax
Georgia’s tax framework is highly favorable, especially in the real estate sector. A major perk of investing in Georgian real estate is the country’s liberal tax policy. Investors who are not tax residents of Georgia are exempt from property taxes, ensuring maximum returns on investments. However, it’s crucial to stay updated on local tax norms and consult with local tax advisors for personalized insights based on the latest regulations.