In order to promote greater transparency in the real estate sector, as well as improve scope for monitoring and help to attract local and foreign investments to the sector, Colliers International conducted a research commissioned by the Ministry of the Economy and Sustainable Development of Georgia, Tbilisi City Hall and Partnership Fund last year. The study summarizes six markets inducing retail, office, hotel, warehouse, residential and entertainment.
At the presentation, Ketevan Bochorishvili, the Deputy Minister of Economy and Sustainable Development of Georgia stated that positive tendencies were visible in all directions. She also noted that this was the first time that such large-scale research study was being carried out on the country’s real estate market.
According to the research, the total retail space in the three main Georgian cities amounts to 1 million sq. meters of which 80% is concentrated in Tbilisi. The largest share of Tbilisi retail space is occupied by bazaars and open markets (43%), with 28% of space allocated to street retail and 29% for shopping centers, which has significantly increased in the last four years. In 2010, shopping centers made up only 16% of total retail space supply.
“In 2014, 54,100 sq. meters gross leasable area (GLA) was added to shopping centre space in Tbilisi by Tbilisi Sea Plaza, Irao, Gldani Plaza and Gldani Mall. By 2015, the total supply of shopping centers will further increase, primarily because of the opening of the new shopping mall East Point, with 72,000 sq meters GLA,” reads the report.
The study notes that the yearly per capita retail expenditure has been growing in recent years. In 2013 it amounted to 3,496 Lari which was 20% more than the country’s average. Meanwhile, 47% of total annual expenditure in Tbilisi comes from retail, which is 5% more than the country’s average figure.
“The popularity of online shopping is significantly growing. Currently, 11% of the Tbilisi population buys clothes on internet, while for shoes and accessories this amounts to 9% and 8% accordingly. Due to the fact that the vast majority of bazaars and open style markets are occupied by individuals and local non-brand shops, branded occupiers account for just 31% of retail space in Tbilisi,” writes the report.
As for the rent prices, the study shows that space in the most prestigious districts like Vake-Saburtalo and the Old Town, cost around $55-60 per sq. meter, which is higher than several Eastern European cities including Tallinn, Riga, Sofia, Tirana, Vilnius and Bratislava, but is 27% less than the average Central and Eastern Europe (CEE) figure. Even though Chavchavadze Avenue and the newly renovated Aghmashenebeli Avenue, together with Marjanishvili Street, are also considered very prestigious, the average rent price here is around $35-40 per sq. meter.
“The average high street retail rent in Tbilisi exceeds the same figure in shopping centers by $10 per sq. meter and stands at around $40 per sq. meter. The average rent in traditional shopping centers and secondary streets varies between $18-22 per sq. meter,” states the study.
Merani Shopping Gallery and Tbilisi Mall have the highest average rents among modern shopping centers with $35-38 per sq. meter, while other older venues like Kidobani ($24) and Passage ($30) are cheaper.
“The street retail average selling price in Tbilisi varies between $1,200-4,900 per sq. meter excluding VAT, depending on location and attractiveness of the street. The highest selling prices are found at Rustaveli Avenue ($4,932) and Pekini Street ($4,785) per sq. meter excluding VAT,” reads the report.
According to the study, the city’s retail market is experiencing major changes, determined by escalating competition between retailers and locations. “The high street retail draw is strengthening and older shopping centers are undergoing refurbishment and–in some cases–repositioning, which is expected to continue this trend in the nearest future. Retailer interest is fuelled by the country’s confirmed orientation towards Europe, its ever improving business climate and strategic location in the region. Following the recent surge in modern supermarket development, it is anticipated that international big box retailers will start to eye this market with an increasing appetite,” concludes the research.
Baia Dzagnidze
16.04.2015
