“The second quarter of 2019 clearly
showed that the new lending regulations
had a very serious negative impact on the construction business. Developers are
facing big problems largely caused by regulations, ” Tornke Abuladze, the head of
the Georgian Developers Association, states.
Abuladze speaks about a decline
in investment in the construction sector by 91%.
“A sharp decline in
investment in construction was caused by several factors , largely by banking regulation
as well as the lari’s collapse and political events in June-July. The sector sees a decline in all types of
transfers – in foreign direct investment
and the purchase of apartments by buyers, ” Tornike Abuladze explains.
In Abuladze’s words, the
construction industry received several tangible blows in a very short time that
complicates the adaptation of developers to quick and simultaneous changes.
“Banking regulations hit
the purchasing power of citizens and deprived
them of chance to take out mortgages. Construction
regulations significantly tighten requirements and standards that has led to a decline
in the number of building permits as many companies cannot meet them. Political unrest in June-July also prevented the sales. The situation is further aggravated
by the national currency’s devaluation which sharply reduces the purchasing power of the
population, ” the head of the Developers Association points out.
Abuladze believes that the largest
problem is the irresponsible lending regulations
adopted without consulting with the
business community that led to very sad consequences such as losses of construction
companies and staff cuts by 6,000 person.
In Abuladze’s words, the situation may worsen if parliament
adopts the draft amendments to the labor
“The project does not hold water, almost everyone opposes
it. Developers also oppose the norms that, if adopted, will limit citizens in
earn additional income,” he concludes.