The Georgian real estate market shows a clear distinction between Tbilisi and Batumi. While the price per square meter is 25-30% lower in Batumi than in Tbilisi’s prestigious districts, the return on investment in Batumi is often 40-50% higher. This phenomenon is due to several factors, including pricing policies, demand and supply specifics, and the strategic approaches of leading developers.
Pricing Policy and Affordability
In 2024, the average price per square meter in Batumi is around $1,470, with prices in central areas reaching $2,000. In comparison, real estate prices in Tbilisi are much higher: in the Saburtalo and Vake districts, the average price per square meter ranges from $1,600 to over $2,500. These differences make Batumi more accessible to investors, especially those looking for properties with growth potential.
Return on Investment
Despite lower prices, investment returns are often higher in Batumi. The average annual rental yield is around 8.8%, significantly higher than the 7.5% yield in Tbilisi. This is due to high demand for short-term rentals, especially during the summer, as well as active interest from foreign investors.
There are three reasons for this imbalance:
1. Tourist factor:
Luxury apartments in Batumi are rented on a daily basis. The cost of renting a VIP apartment on the first line during the season is $200-$300 per day. Even with a 50% occupancy rate, that amounts to $3,000-$4,500 per month.
2. The casino industry:
Batumi is the only city in Georgia where casinos operate legally. This creates a constant demand for luxury housing for gambling industry employees and customers.
3. Management flexibility:
Tbilisi owners are more likely to rent out housing long-term (one year or more), while Batumi investors use dynamic pricing to maximize profits during peak periods.
Developers’ Strategies
In Batumi, leading developers such as Metropol, Alliance Group, Orbi Group and Apart Group are developing projects targeting international buyers. These developers offer modern residential complexes with developed infrastructure, including swimming pools, fitness centers, and spas. They pay special attention to the quality of construction and design, attracting investors looking for properties with high profitability potential.
Apart Group stands out with its projects in Tbilisi’s historical center, such as Old City Panorama II, which combine traditional Georgian architecture with modern amenities. However, in Batumi, the company is also realizing projects that meet international standards, thereby expanding its market presence.
Risks and challenges
Despite attractive returns, the Batumi real estate market faces several challenges. These include seasonality of demand, high competition among landlords, and possible market oversaturation. In 2024, the number of sales decreased by 43% compared to the previous year, which may indicate the beginning of a market correction.
Conclusion
The difference in prices and yields between Tbilisi and Batumi is due to a combination of factors, including pricing, supply and demand, and developers’ strategies. Batumi offers more affordable prices and high yields, making it attractive to investors. However, investors should consider the risks associated with seasonality and competition in the market. Careful analysis and selection of a reliable developer, such as Apart Group, can help minimize risk and maximize return on investment.