Commersant spoke to Nikoloz Gelenidze, former CEO of Hualing, about the challenges facing the construction sector. The first issue we asked him about was the current interest rates on mortgage loans. Nikoloz Gelenidze says that banks should lower interest rates and extend the loan issuance period to boost real estate sales.
"If we talk about mortgages, there is a very simple solution: to lower the interest rate." We have double-digit economic growth. How can you imagine an interest rate of 12, 14, 16% with double-digit economic growth? It is unthinkable when in countries with much weaker economy than ours, the price of the same money is 6-7%, maximum 9%. Lower the interest rate. 3% is artificial inflation in Georgia. Why? Because the economy moves forward. Anything above 3% is profit. Let's say a bank bought money at 5% and sold it at 7%. What does it lose? Nothing. "Loans at 7%, 8% and 9% would be a big relief for Georgia today and would also be a big boost to the economy," says Nikoloz Gelenidze.
We asked the former CEO at Hualing how much interest rates could be cut. In his words, interest rates on loans in Georgia are set by trading on Western stock exchanges. Nikoloz Gelenidze claims that the West treats Georgia like a slave and gives the country money at high interest rates.
"In England, the money exchange determines the interest rate at which money should be issued for Georgia." Georgia will then issue this money as a loan to the people. Unfortunately, the West treats us very badly. In a word, we do not know our worth. If we knew our worth and demanded what is rightfully ours, the interest rate would also be lowered. It can also be lowered mechanically. The National Bank can issue a corresponding regulation. Encouragement is necessary. "The robbery of the Georgian people must stop," says Nikoloz Gelenidze.
In an interview with Сommersant the former CEO notes that the construction sector needs support, as today Georgia’s economy largely depends on it. Nikoloz Gelenidze believes that lowering interest rates and extending loan terms will boost real estate sales.
"If we do not build the economy, we will suffer greatly." We have no production and we are completely dependent on it. Construction firms will collapse if the purchasing power of the population does not increase. The first thing that will increase sharply is the reduction of interest rates on loans. If you cut it by half, purchasing opportunities will double. There is not a single mortgage loan in the world with a term of less than 30 years, because it allows, for example, not to pay GEL 1,500 per month, but GEL 300 -400 , and a person will have money left for a little entertainment, rest and clothes. Instead of one property with your salary, you will create three properties with such interest and such term. Shouldn't the bank do this? Who should tell the bank about this? The National Bank. Who should tell the National Bank? The government should tell them about this. Who should tell the government? “People,” Nikoloz Gelenidze points out.
