As per Galt&Taggart review, after record-high demand in 2022-2023, Batumi real estate market experienced a slowdown in 2024. This decline can be attributed to several factors, including a gradual outflow of migrants, rising prices, high interest rates, and domestic political instability. Despite these challenges, Batumi’s real estate market remains one of the highest-yielding in comparison to many peer cities, and prices continue to rise, albeit at a slower pace. We expect prices to stabilize at current levels in 2025 and see upside potential if interest from foreign buyers increases further.
In October 2024, we carried out a survey involving 6 systematic developers with ongoing construction projects in Batumi. According to the survey results, the number of apartments sold on the primary market dropped by 22.9% y/y in 9M24. This decline was primarily driven by reduced sales to locals and Russian buyers. However, sales to Israeli citizens increased by nearly 55% y/y, and sales to nationals from other foreign countries showed a modest decline. To sustain foreign demand in the future, rental yields will need to remain attractive.
Similarly, sales on the secondary market also decreased in 9M24, falling by 10.0% y/y to a total of 4,752 apartments. This decline was mainly attributed to the gradual outflow of migrants.
Price growth continued on Batumi primary market (+3.0% q/q), although the pace of price increase has slowed down. Throughout 2022-23, the monthly price growth rate on the primary market was 2-3%, but it has now fallen below 1% in 2024.
In 9M24, the total market value of apartments sold in Batumi stood at US$ 675.5mn, down by 10.0% y/y, reflecting decline in apartment sales.
In Sep-24, rental rates in Batumi were down as expected compared to Jun-24, related to the end of tourism season. Notably, rental yield still remains high standing at 9.0%, considerably above peer cities.
Given the scarce land resources in Batumi, the growth of real estate development initially expanded in the nearby areas of the city, Gonio-Kvariati (15 ongoing projects) and Makhinjauri (19 ongoing projects). Currently, it has expanded further along the coastal line of Adjara, encompassing areas such as Chakvi, Tsikhisdziri, Kobuleti, and Shekvetili (20 ongoing construction projects in total).
In 3Q24, weighted average price on the primary market in Kobuleti reached US$1,233/m2 (+5.0% y/y). Cumulatively in 9M24, 495 transactions were registered in Kobuleti, down 33.5% y/y.
