Construction and Housing Market in Georgia: Fewer Projects, Larger Scale

In Q1 2025, Georgia issued 2,358 construction permits, which is a 5.4% decrease compared to the same period in 2024. However, the total approved construction area increased by 11.9% to reach 2.59 million sq. meters, according to Geostat. The market is clearly shifting toward larger-scale development projects.

Regional Distribution and Project Types

As usual, Tbilisi leads in activity, accounting for 47.4% of all permits. Other active regions include:
- Kvemo Kartli – 12.9%
- Mtskheta-Mtianeti – 8.0%
- Kakheti – 7.2%

These four regions together account for 75.5% of all new permits. Other shares include:
- Imereti – 6.3%
- Shida Kartli – 4.5%
- Samegrelo-Zemo Svaneti – 3.3%
- Samtskhe-Javakheti – 3.0%
- Adjara – 5.9%
- Guria – 1.1%
- Racha-Lechkhumi and Kvemo Svaneti – 0.5%

Permits covered a wide range of property types: residential complexes, retail spaces, hotels, industrial buildings, and agricultural facilities.

Drop in Completed Projects

Only 698 buildings were completed, down 17% year-over-year. Total completed floor area fell 18.1% to 659,600 sq. meters.

Regional distribution of completed projects:
- Tbilisi – 32.5%
- Mtskheta-Mtianeti – 14%
- Kakheti – 11.3%
- Shida Kartli – 9.3%
- Imereti – 9%
- Kvemo Kartli – 8.5%
- Samegrelo-Zemo Svaneti – 6.2%
- Samtskhe-Javakheti – 3.4%
- Adjara – 3.3%

This highlights the imbalance between permit issuance and actual construction completion, as well as differing project durations by region.

Developer Costs Rise

In March 2025, Georgia’s construction cost index rose by 2.2% month-over-month and 6.3% year-over-year. The main contributors were:
- Wages: +22% YoY, adding 4.25 p.p.
- Building materials: +2.7% YoY, adding 1.64 p.p.

Other cost components had minor impact.

By segment:
- Residential construction: +3.1% MoM, +9.2% YoY
- Non-residential: +3.6% MoM, +5.5% YoY
- Civil engineering: +0.9% MoM, +3.5% YoY

Compared to February 2022, the overall index has grown by 23.5%.

Demand and Price Trends

Georgia’s housing market shows mixed trends. The secondary market is slowing down:
- Tbilisi: deals down 15.5%
- Batumi: deals down nearly 46.5%

In contrast, new developments are gaining traction:
- Tbilisi: +4.2%
- Batumi: +12%

Prices are rising across all segments. In Batumi (March 2025):
- New builds: +4% YoY → $1,170/sq.m
- Secondary market: +22.5% YoY → $1,149/sq.m

Luxury Segment and Investment Returns

The premium segment continues to thrive, especially in Batumi. According to International Private Investment, high-end properties in coastal areas are the key growth drivers.

- Some projects see annual price growth over 30%

- Old Town and Gonio-Kvariati areas are in high demand

- New developments include international hotel brands and elite residences

Rental yields in Batumi remain among the highest in the region:

- Average: 8.8%
- Coastal premium projects: over 10%

Tbilisi also shows a shift toward upscale properties, offering competitive returns compared to major European cities.