According to Galt&Taggart report, in August 2024, demand for real estate continued to improve, but it still remains sluggish compared to the beginning of the year. Prices in August increased slightly by 0.3% m/m on the primary market, after remaining flat in July. Weakened demand is also affecting supply - over the past three months, the volume of permits issued for construction has decreased sharply, by 41.9% y/y. Permit issuance dynamics are likely to be maintained by end of 2024 as developers await until demand improves considerably.
Primary market - presales from developers According to our survey of systematic developers, apartment sales recovered in July and August 2024, after a sharp drop in May, attributed to a series of holidays and street protests. However despite the improvement, demand still remains sluggish, with August sales 2.6% lower compared to the 4M24 average.
In 8M24 compared to last year, the share of Israeli citizens in sales increased significantly from 5% to 11%, offsetting a decrease in sales of Russian citizens, which dropped from 9% to 2%. Share of Georgian citizens in apartment sales remained flat at 78%.
Other noteworthy features of the market remained unchanged, such as the dominance of medium-sized apartments (51-80 m2 ), due to affordability and the ease of renting, and falling share of sold apartments in the budget segment (<$1,000/m2 ), driven by rising prices.
Secondary market – registered transactions In Aug-24, the number of sold apartments on the secondary market in Tbilisi stood at 1,584 units, down 10.6% y/y and 5.4% m/m.
Cumulatively, in 8M24, 13,080 apartments were sold on a secondary market in Tbilisi, down 7.1% y/y, reflecting weakened demand.
In Aug-24, average price on the primary market increased slightly by 0.3% m/m, after remaining flat in Jul-24. Slower pace of monthly price increase is mainly attributed to a sluggish demand.
In Aug-24, the total market value of apartments sold in Tbilisi stood at US$ 244.9mn, down by 4.8% y/y and 9.4% m/m, due to decrease in apartment sales. Cumulatively in 8M24, Tbilisi real estate market size was up by 1.0% y/y to US$ 1,953.4mn.
In Aug-24, price for renting an average apartment (50- 60 m2 ) in Tbilisi increased slightly to US$ 9.9 per m2 . During 2024 rent prices in Tbilisi remained largely stable around US$ 10 per m2 .
In Aug-24, the sharp reduction in building permits, which started in Jun-24, continued. In total, the area of permits issued in the June-August period decreased by 41.9% y/y. We expect that developers will delay permit finalization process until the demand improves considerably.
