Georgian Economy:
Georgia has made substantial progress in recent years in terms of economic growth, with GDP in 2007 a very strong 12.4%. The sustained liberal reforms that have taken place between 2004 and 2008 have laid a firm foundation for long term sustainable growth. Significant improvements in the business environment have resulted in positive developments in all spheres, such as fiscal/budgetary, financial, social services, external trade and infrastructure development. FDI inflows in 2007 reached new highs of over €2 billion (19% of GDP) and new business registrations exceeded 50,000.
The World Bank notes Georgia now ranks 18 out of 178 countries (up from 35) in its Ease of Doing Business Index 2008. Perhaps more importantly, Georgia scores 79 on the Transparency International Corruption Index (2007), up from 99 in 2006. Russia and Ukraine scored 143 and 118 respectively. Reforms are making a positive impact.
The Government has estimated that the damage caused by the recent conflict with Russia amounts to circa $2 billion. However, the Georgian economy has continued to function almost normally, even though under extreme stress. The GEL/USD exchange rate has remained at 1.41 pre and post conflict and the growth of the deposits in the local commercial banks resumed.
Georgia has already been promised substantial economic aid from the West to help it recover both physically and economically. International financial institutions like the IMF, World Bank, ADB and EBRD have all offered to increase funding. The Bush administration announced a package of $1 billion dollars in aid to help rebuild its war-torn ally. The European Union is also promising to allocate significant funds. This level of aid should be sufficient to compensate for the damages of the recent war.
Georgia: Key Economic Indicators 2004 2005
Georgian Real Estate Market History and Trends
The real estate market in Georgia is in its conceptual stage.
During the 1980’s the prices on the residential real estate in Tbilisi were comparable to those in such soviet cities such as Moscow, Kiev, Leningrad (St. Petersburg), making Tbilisi’s residential stock one of the most expensive in the entire Soviet Union. However, the break of the Soviet Union, led to political disputes followed by a civil war, regional conflicts and devastation of the whole economy.
The changes in the economic policy brought by “The Rose Revolution” in 2003 sparked economic growth which was followed by the boom in the residential sector reflected in the growth of prices and production.
Nevertheless, deficiency of financing delays development of the real estate market. Majority of the local developers lack share capital and because of this bank financing is limited. As a result developers have to rely on prepaid cash flows from customers, slowing down the construction and bearing high risk of cost increase during the construction process.
We believe that introduction of strong financial partner will allow us to decrease dependency on the pre sale cash flows, resulting in increase of project yields.
We offer our investment partners broadest local experience, sound local brand and numerous opportunities of making financially appealing development projects in Georgia.
