Tbilisi Real Estate Market in February 2025: Declining Sales Amid Rising Prices

The Tbilisi real estate market faced significant shifts in February 2025, as property sales declined by 8.9% annually, while prices continued to rise. According to a report by Colliers International, the total market volume fell slightly by 0.6%, amounting to $234 million. Despite lower transaction volumes, property prices kept climbing, creating a mixed outlook for both buyers and developers.

Why Are Sales Declining?

The primary reasons behind this downturn are economic and financial pressures:

• Slower economic growth in Georgia
• Currency fluctuations impacting purchasing power
• Stricter mortgage lending conditions by banks
• Global economic and political uncertainty, which has discouraged investor confidence

Higher mortgage costs have forced many potential buyers to postpone their purchases, as banks have tightened lending requirements. This aligns with a broader global trend, where rising interest rates and inflation are affecting real estate demand.

Why Are Prices Still Rising?

Despite the drop in sales volume, property prices in Tbilisi remain on an upward trajectory, particularly in the broader central districts, where prices surged by 20.4% year-on-year.

• Suburban areas saw a 10.3% increase
• The city center recorded a 7.1% rise

The significant jump in broader central districts is largely due to the completion of major development projects, which temporarily influenced price dynamics in 2024. As these projects exited the market cycle, property prices rebounded sharply. Additionally, a limited supply of new developments has fueled demand-driven price hikes.

Old vs. New Apartment Price Trends

Price growth is also evident in older apartments, particularly due to their central locations:

• Broader center: +12.6%
• Suburbs: +6.2%
• City center: +5.9%

Interestingly, older apartments in central areas are often priced higher than newly built ones. This is because Soviet-era buildings are strategically located, while land for new projects is scarce in prime locations. Despite outdated infrastructure, their accessibility and central positioning keep demand high.

Market Outlook: What’s Next?

Tbilisi’s real estate market follows cyclical patterns, and 2025 seems to be a correction year after a record-breaking 2024. If mortgage conditions remain strict and economic stagnation continues, sales are expected to keep declining in the coming months.

However, price growth may slow, as affordability concerns deter buyers. This could drive higher demand for rental properties, potentially pushing rental prices upward. Developers might shift toward more affordable housing projects to attract price-sensitive buyers.

The future of the market will depend on several key factors:

• Potential banking policy adjustments
• Economic recovery
• Global financial stability
• Government regulations in real estate

Despite ongoing challenges, real estate remains an attractive investment, particularly for those seeking long-term capital appreciation.