Last updated June 8th, 2022.
We enjoy covering overlooked property markets like Tbilisi’s. Investors generally have greater opportunity in countries such as Georgia that aren’t yet swarmed by multinational firms and hordes of tourists.
Plus, there’s already lots of online info about “standard” investment destinations. People can read about China or Japan on thousands of different websites.
Major news outlets talk about these economies all the time, and the number of unexplored opportunities left in Asia’s largest stock and property markets are dwindling.
Today’s article is a bit outside our normal scope. We usually focus on Southeast Asian property markets, but Georgia is located in the Caucasus region bordering Europe and Asia.
Georgia (the country, not the U.S. state, just to be 100% clear) is more western than any other emerging economy we’ve covered thus far.
Depending on who you ask, Georgia isn’t even on the Asian continent.
Several geographic definitions, like the United Nations geoscheme, put Georgia in Western Asia. Georgia and its capital of Tbilisi are distinctly European in both a cultural and political sense though.
Either way, putting semantics aside, our goal is informing you about places worthy of investment. Keep reading to learn why property in Tbilisi, Georgia is among the world’s most undervalued.
Georgia’s Weak Reputation, But a Different Reality
Georgia doesn’t really have a bad global reputation. They merely don’t have much of one at all.
Foreign investors often choose a property market based on their perception of them. Here are some examples: you’re more likely to buy real estate in Thailand if you already visited there as a tourist.
Similarly, a person who rarely travels will typically stay at home and purchase assets they’re familiar with. Unadventurous people rarely make adventurous investors.
We all have a strong confirmation bias. Meanwhile, very few of us can visit every country, judge the situation “on-the-ground” with our own eyes, or make true comparative global investment decisions.
Basically, you’ll only consider investing in markets if you’ve heard of them in the first place. Georgia is very quickly gaining a reputation among tourists and companies though.
A quaint 547,000 passengers flew into Tbilisi’s main airport back in 2005. Barely a single decade later, there were over 3,800,000 arrivals in 2018, rising more than 600%.
Likewise, Georgia is climbing up the international business rankings. The World Bank rates them 7th place out of 190 countries in their annual Ease of Doing Business Index.
Georgia ranked 26th out of 180 countries in the Economic Freedom Index as well. Not bad at all, considering it’s the poorest country in Europe outside of Ukraine.
Of course, it’s merely a matter of time until the rest of the world starts noticing Georgia along with Tbilisi’s undervalued real estate market.
First movers gain most when investing in frontier economies, and appreciation is generally sudden. Getting into the market a bit early is better than too late.
Tbilisi Property Offers Great Valuations
Prime real estate in middle of a capital city usually costs US$1,000 per square meter ($90 per square foot) at the very minimum. That’s true almost anywhere on the planet.
It doesn’t matter if the local economy is underdeveloped. Heck, a even two bedroom condo in central Beijing costs around two million dollars. Property in less established cities like Ljubljana or Prague are still valued at around US$4,000 per square meter.
You might consider these prices expensive if you’re living somewhere such as Dallas or Miami. However, it’s worth remembering that a nation’s capital or primary business center possesses a certain type of sway that other cities simply don’t.
This is because residing in a nation’s capital is often the only way a business, whether local or international, can effectively operate in a country. Greater demand drives up real estate prices – especially in smaller nations with just one major city.
You could count the number of capital cities where it’s possible to buy central property for under US$1,000 per square meter on one hand. Tbilisi makes this list, joining other metro areas including Karachi and Cairo which are far less developed.
Rental yields in Tbilisi are also high, hovering around the 4%-5% range. Buying an apartment to rent out, and finding tenants while awaiting long-term capital appreciation, remains a solid option.
All these factors indicate that Georgia’s real estate market is clearly undervalued within an international context. Prices in Tbilisi have few places left to go except upwards.
A newly built, one-bedroom apartment in Tbilisi costs around US$70,000. That’s a price unrivaled by almost any other capital city on earth.
Georgia’s Economy: Best in the Caucasus
A single country’s asset prices, whether you’re buying real estate or stocks, depends heavily on its broader economic performance.
Georgia is one of the biggest success stories to come out of the former USSR. Following major institutional reform back in the early 1990s, a newly democratic Georgia began opening up to foreign investors.
The Georgian economy has proven itself resilient to the rest of the world’s problems since then. In fact, Georgia enjoys a long history of avoiding recessions and suffered just a single year of GDP contraction over the past two decades.
Large multinational firms including McDonald’s and Carrefour are now setting up shop in Tbilisi. Huge luxury malls are opening, the airport is under renovation, and entire sections of the city are getting refurbished.
Tbilisi’s upgraded infrastructure and new real estate developments are positive for not just the city’s property market, but the Georgian economy as a whole.
Consider buying property in Tbilisi if you want to invest in Georgia’s overall growth. The nation doesn’t have its own stock market yet. Buying real estate or starting a business in Georgia is therefore your best option as a foreign investor.
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