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Russia and Georgia: How did politics affect the Georgian real estate market?

Recent political events affecting the relations between Russia and Georgia have also affected the Sakartvelo real estate market, which, along with tourism, has been gaining more and more popularity every year among Russians.
Georgia, as you know, attracts with good business conditions, since small entrepreneurs pay almost no taxes, while Russian citizens can stay in Georgia without a visa and a residence permit for up to 360 days a year – it is not surprising that such conditions attracted a considerable number of people. With questions about whether it is worth worrying about the current situation for those who want to buy real estate in Georgia or already own it, HomesOverseas.ru turned to experts from the Georgian real estate market.

– How did the recent political events affect the real estate market of Georgia?
Galina Dmitrieva, representative of Nazarov & Partners in Georgia:

In the first few days, the real estate market reacted quite sharply: many developers felt the cancellation of pre-bookings for the purchase of apartments, several transactions were canceled with us. However, I believe that in spite of everything, the Russians will still remain one of the most active groups of buyers and tourists in Georgia, if only because this group is the largest and, regardless of sanctions, Russian citizens still go here by car or change tickets for connecting flights.

In the short term, the hotel industry is suffering the most due to general panic – many have changed their decision to go to Georgia in the coming July and August. But in the long run, when the “dust settles”, Russian tourists and investors will prevail. Another thing is that now the Georgians really look at the map widely and try to open new promising ties with Azerbaijan, Kazakhstan and even China. It is here that I see new channels for investor search and tourist flow.

Lana Korbelainen, Managing Director, Habita Georgia:

June political events in Georgia came as a surprise to all business, especially at the beginning of the tourist season. In the real estate market, this was reflected primarily in the fact that he froze for several days, since no one understood what to expect next.

Olga Weiss, PR Director of Orbi Group Holding:

At the moment, it is very difficult in reality to assess the impact of the political events that have occurred, since relatively little time has passed. So far, we are registering incoming calls from Russians – they have become a little less, but not critical.

– How much does Russian demand affect the Georgian real estate market?
Galina Dmitrieva, representative of Nazarov & Partners in Georgia:

I think that it makes no sense for developers to “drop” real estate prices sharply, because such an impulsive decision can entail even greater panic: many customers made their purchases on installments or even in a mortgage, so a sharp decrease in prices will force them to cancel existing contracts in order to obtaining more favorable conditions. But many developers are still considering new marketing moves, offering customers discounts or compensation for the cost of flights, especially to those buyers who had to hand over their tickets due to sanctions.

Lana Korbelainen, Managing Director, Habita Georgia:

Russians on the real estate market in Georgia are not so brightly represented. The main buyers of real estate and owners of construction companies are the Georgians themselves, as well as Azerbaijanis, Turks and Arabs. Their Russo-Georgian conflict did not affect or frighten.

Olga Weiss, PR Director of Orbi Group Holding:

Over the past six months, the demand for real estate from the Russians has grown five times compared to the same period in 2018. But in our company real estate is acquired by citizens of 77 countries, and we cannot say that the majority of Russians are. And as before, we are important both clients from Russia and from other countries.

– Does the current situation differ from the Russian-Georgian conflict a decade ago in terms of increased caution of Russians in the matter of buying real estate in Georgia?
Galina Dmitrieva, representative of Nazarov & Partners in Georgia:

It is impossible to draw an analogy between the situation 10 years ago and today: both Georgia and the Russians have changed a lot over this period. Georgia has flourished in all its tourist splendor. Even 10 years ago, no one could have imagined such a growth in the real estate market in Batumi and its environs. And today Georgia receives over 7 million tourists who are absolutely in love with her annually.

Lana Korbelainen, Managing Director, Habita Georgia:

Russian real estate buyers about 50% postponed their transactions to clarify the situation, and another 50% bring their transactions to an end. Those Russians who already have real estate did not rush to get rid of it en masse. In any case, we did not receive additional requests for the sale of real estate from the Russians, and no one indicated the reason for the sale of this conflict.

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