From coast to capital: rising costs reshape Georgia’s property market

Cranes dominate Tbilisi’s skyline and Batumi’s seafront, signaling a property market that shows little sign of slowing. Prices climbed across both cities this summer, even as construction costs pushed higher.

Property prices in Georgia are unlikely to come down any time soon—or at least that is the message from the real estate and construction industries. Both sectors are seeing key metrics rising: in June, Tbilisi residential asking prices were up 8% YoY, while in Batumi the increase was 12%. Meanwhile, Georgia’s building costs rose over the last year, pushing property prices higher still. And there seems to be no shortage of buyers from Israel and the Middle East, even as demand from Russia has declined.

Property market

“Cumulatively, in 1H25, 773 Batumi apartments were sold in selected developers’ projects, up by 37.3% YoY,” says the latest residential property report from investment bankers Galt & Taggart. Peer bank TBC reported in June that the number of Tbilisi transactions compared to a year ago was up 11%. Meanwhile, GeoStat’s Construction Cost Index was up 6.1% in June 2024, with the residential segment 7.4% higher—largely due to a 24% rise in wages.

Estate agents Colliers reported even stronger Batumi figures: in July, transactions were up 36% YoY to 1,664 units, with “market size increasing by 60.7% to $104 million.” Transactions for newly built apartments rose 38.4% in July 2025 (23% excluding a major new project), while sales of older apartments increased by 4.9%.

According to online magazine International Private Investment, the premium segment continues to thrive in Batumi, with high-end properties in coastal areas being the key growth drivers. It comments that “some projects are seeing annual price growth of over 30%.”

For Tbilisi, Colliers reported a market size of $293 million. Weighted average selling prices for old apartments rose over the past year by 11% in suburbs, 7.9% in the city center, and 4.6% in the wider center. New-build apartments saw sharper increases: 23.8% in the wider center, 14.7% in the suburbs, and 13.3% in the city center.

Transactions in new Tbilisi projects increased by just 1.5% compared to July 2024, according to Colliers. In the primary market of newly built apartments, they fell by 11.8%. By contrast, the secondary market grew 24.1%, with old-project deals also rising 11.7%.

Tbilisi too is shifting toward upscale properties, offering competitive returns compared to major European cities, according to International Private Investment.

Whether prices will continue to rise at the same pace is another matter. Quoting Colliers, the developers of Ambassadori Kachreti suggest that 2025 represents “a turning point, from speculative buying to strategic investing,” as the market stabilizes: “This stabilization signals maturity, not contraction. Buyers are no longer chasing quick flips; they’re evaluating long-term value, infrastructure, rental yield, and livability.”

Construction dynamics

The jump in construction costs is causing concern. This is a regional trend, with costs rising across Turkey and Central Asia as the pace of development quickens. Earthquake recovery in Turkey, wartime reconstruction in Ukraine, and infrastructure investment in mineral-rich Uzbekistan and Kazakhstan are all driving demand. According to U.S.-based Trading Economics, Ukraine’s construction industry, a competitor for Georgian labor, expanded by 22% last year due to wartime reconstruction; Turkey’s grew by 11%, and Uzbekistan’s and Kazakhstan’s by 23%.

Georgia is particularly vulnerable to cost pressures. It imports many building components and faces a shrinking labor force due to emigration. TBC notes that the workforce “has not expanded much since 2019 despite a surge in construction activity,” suggesting that “labor supply is limited and the sector is trying to build more with fewer workers.” The ratio of employed workers to 1,000 square meters of potential residential area supply “has nearly halved in six years.”

Georgian analytical site BTUAI comments that the increase in wages in construction, which had been at the rate of around 20% a year, “is widely recognized as the primary driver behind rising construction costs in Georgia and is likely to continue influencing the industry’s pricing and labor trends.” The latest available data shows that as of June 2025, this rate is picking up speed,  with SPNews reporting that “construction sector wages in Georgia increased by 23.5% compared to June 2024.”

TBC’s report adds: “persistent labor outflows and unfavorable demographic trends have brought a sustained shortage of skilled workers, intensifying competition and compelling companies to raise wages.”

In a June review of Georgia’s construction and home improvement sector, Galt & Taggart commented that in this $5.7 billion market (accounting for over 8% of Georgia’s GDP), “almost two-thirds of revenue in construction materials and home improvements comes from imported goods.”

Turkey and China remain the main sources, accounting for 50% of imports in 2024. Helpfully, the lari has risen against the Turkish lira even if falling against the Chinese renminbi. While Georgia produces much of its own basic construction materials like concrete, cement, and rebar, clinker—the main input for cement—remains imported and costly.

Vulnerable though construction companies are, it is the home improvement companies that are facing the strongest headwinds – they are heavily exposed to international markets since almost all products are imported. Price spikes have been exacerbated by higher transport costs for goods from Asia following the Red Sea crises as Houthi rebels blockaded shipping. Statista quotes a number of additional adverse factors, including “intense competition within niche sub-markets, and shifting consumer preferences toward eco-friendly and e-commerce options, which demand adaptation by traditional retailers.”

Another important trend is visible in building permits. In 2025, while the number of permits issued decreased—particularly in Tbilisi—the average project size and total approved construction area increased. International Private Investment notes this shift toward fewer but larger developments.

In Q1, Georgia issued 2,358 construction permits—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 square meters, according to Geostat. By June, the total area was up by 17%. Tbilisi leads in permit applications, accounting for 47.4% of all permits. Other active regions include Kvemo Kartli (12.9%), Mtskheta-Mtianeti (8.0%), and Kakheti (7.2%).

Investment outlook

Given the high proportion of Georgian residential property bought for investment, gross rental yields are key. Figures vary according to source, and those around in Q1 suggest a range of  4.6% to 10%, with a city average of around 7.3%. For prime properties, such as near the boulevard or new city center, figures of 8-12% are given. Holiday and coastal homes in Batumi tend to deliver higher rental returns, sometimes reaching up to 15%.

Tbilisi rental yields vary both according to source and across districts, but average slightly higher than Batumi on most lists, at about 7.8% in Q1. Some districts, like Didi Digomi, with its large houses, show yields as high as 10.18%, but other areas like Saburtalo and Vake have lower yields, mostly between 5% and 7%.

Overall, Tbilisi’s rental yields for apartments fall mostly between approximately 5.6% and 8.7%, depending on the area and apartment size. Other residential areas in Tbilisi with noted rental yields include Gldani (6.38% to 8.36%), Isani (7.12% to 8.76%) and Nadzaladevi (6.15% and 8.75%).

All this is good news for the international estate and investment agents, most of whom are marketing Georgia in the Middle East and Asia. “Yields match some of the best in Western markets,” says International Private Investment. Yields in the U.S. are, according to the Global Property Guide, “around 6.5%” while prime European residential yields “are expected to be around 6% this year, running slightly lower than offices.”