The Impact of Airbnb on Tbilisi’s Real Estate — How Short-Term Rentals Are Reshaping the Market

One of the most significant shifts in Tbilisi’s real estate market in recent years has been the rapid rise of short-term rentals. At the same time, the long-term rental market, which had been steadily growing due to internal migration, the arrival of foreign residents, and overall economic expansion, is now coming under increasing pressure.

According to Galt & Taggart, the average annual rental yield on Tbilisi’s long-term market stands at around 8.6%, making it one of the highest rates compared to other capitals in the region. However, this picture changes substantially when short-term rental income is factored in, as many property owners can achieve even higher returns.

Data from AirDNA and Airbtics shows that the number of active listings on Tbilisi’s Airbnb market is approaching 6,800. The average occupancy rate fluctuates between 48% and 60%, while the average daily rate ranges from $38 to $51. Under these conditions, property owners can generate annual income of between $8,000 and $12,000 from tourist rentals alone, significantly exceeding the income typically generated from long-term leases.

These figures explain why many owners have shifted a substantial portion of their properties from the long-term market to short-term segments. Apartments in Old Tbilisi, Freedom Square, and other tourist-heavy areas have become particularly popular, as short-term rental income in these districts far exceeds the citywide average. An additional factor is that more than 90% of Airbnb guests in Tbilisi are foreign tourists, further reinforcing the profitability of the segment.

However, this process has its downside. The reduction in supply on the long-term rental market has already contributed to rising rental prices. The shrinking number of apartments available for long-term lease is making it increasingly difficult for local residents to find affordable housing. Moreover, the growing influx of foreign migrants and temporary residents is adding further pressure on affordability.

Similar patterns have been observed in other cities. For instance, studies in London have shown that the growth of Airbnb listings redirects between 1% and 20% of the housing stock into the short-term rental market, placing considerable pressure on long-term rents. In Tbilisi, where short-term rentals operate with virtually no regulation, similar risks are already becoming apparent.

For the city’s urban development, this is one of the most complex issues. On the one hand, tourism revenue and foreign capital bring new momentum to the economy. On the other hand, the deterioration of housing affordability creates social imbalances and puts local residents under serious pressure.

For Tbilisi, the key challenge will be finding a balance between economic benefits and social stability, ensuring that the city can attract investment while still meeting the housing needs of its own population.