So, to come back to your questions. First of all, I am only taking about apartments here, not about other real estate, especially not hotels, where I have no experience.
1. Type of apartment: There are basically two types of apartments one can consider buying in Tbilisi.
a) New Apartment: First is a new apartment, where you have to carefully consider the building quality as you mentioned. I believe depending on the builder, you can rely on the quality more or less.
b) Old Apartment: You can (and should!) buy old apartments. With old apartments, I am talking about an historic apartment in the old town of Tbilisi, ideally that is a national monument. You can check the monument status easily in the land register excerpt. Many of the old apartments in the old town have monument status. It comes with advantages and disadavantages. Advantage is that the government will take care of it, and, according to my information i verified with plenty sources, you will not be asked to contribute to the renovation costs. But your apartment will shoot up in value after the apartment has been renovated. There is a big governmental renovation plan in place for the old town, also against the background of the hope that the old town may become UNESCO world heritage. You can check in public registers the estimated point in time when your building is scheduled for renovation. Prices for old apartments and new apartments are comparable, but the chance for price increases in value is much more on the old apartments.
Disadvantage of the old apartments is that they have often defect and stability issues, but again, therefore, it is so important to buy a national monument protected building. I had my apartment reviewed by a building engineer before purchasing the property. Such buildings are protected by the government and should building issues occur, government gives priority to such apartments and will not allow those to fall apart. Further disadvantage is that you need approval for many measures, like changing windows, putting air con, etc. Many people, expecially locals, do it anyway, and rarely something happens. But especially as a foreigner I would adhere to the rules.
2. Investment Strategy
You are correct that the local population should not be your target group due to lack of financial resources. Target group should be tourists via AirBNB rental or westerners who want a top historic apartment in the old city to experience the true Tbilisi style for mid term rents (like 1 year or so as posted employees).
If you rent via AirBNB, there is an agency, we host ge. https://www.wehost.ge/en/home/
They will rent your apartment for 25% fee, which is very reasonable, considering this includes advertisement of apartment, cleaning, 24/7 availability for tenants, etc. I know the guys and they are good and honest people.
You need to know that there are approx. 25 to 30k apartments for AirBNB in Tbilisi. So there is a huge supply, every one wants to get part of the cake of the increasing touristic destination Tbilisi. So you need a top apartment in a good location. According to Wehost guys, despite crisis, they have currently a 70% occupancy of their apartments despite lock down, which is unbelievable. Its mainly local tourists and foreignis stuck in Tbilisi. However, prices are obviously very low. For my apartment, top location, top building, I would currently not get more than 25 to 30 USD/day.
My original plan was to go in the apartment over christmas/NY, and start renting next season, season goes from March/April to October, July and August are the top months. For my apartment, I could expect up to 100 USD/day in the top months, approx. 3k/months, and something between 1 and 2k in the other months, subject always to 25% fee for Wehost.
As now, there is uncertainty about the lock down and whether tourist season 2021 will kick-off or not, I decided to rent out "mid-term", rented to a French lady working for the EU and I got a top price, 700 EUR/months. This is extraordinary, most apartments of the size of mine go for less than half of this at the moment. But its all about flair and location, location. I think I was lucky also, however, her condition was that she can stay at least one year. So I agreed, with the disadvantage I cannot come into my own apartment this summer :-(
By the way, there is a 5% tax on rental income in Georgia. People tell me almost no one is paying it, but I will. Most countries have double taxation treaties with Georgia, and so does my country of residence have. There will be a small additional tax in my home country then.
My apartment:
Some key figures about my apartment:
Size. 80 sqm
Location: Very central, 150m from Marjanishvili Metro
Apartment: Beautiful old apartment, monument protected, floor 2/2, ceiling 4.70 high, 2 bedrooms
Purchase price 105 USD, including all furnishings and equipment as seen on the pictures, no side costs (no notary fee, no RETT, nothing, no brokers fee (pays the seller), but I paid something to my friend and the broker who helped me to find the apartment. Was completely voluntarily and out of gratitude. And I paid a lawyer (500 USD only).
But I admit the apartment was an excellent price, I would say if the tourists come back after Covid, I could sell it as is for 130k directly (original asking price was 140k USD). I went there during covid when only Germans and French citizens could go there without quarantine and had a seller who needed to sell urgently.
I attach some pictures:
Prospects:
In my opinion excellent, Prices are low, country is relatively stable and tourism is increasing in huge % rates every year (with an obvious drop due to Corona now, thats why apartment prices went also down and one should buy now!). If Georgia getting closer to EU and Nato, which they want, prices could go up significantly. Plus my apartment is scheduled for renovation according to national plan in 2024. After that, price will increase 50% until double directly based on previous experiences.
It will never be a problem to sell a good apartment in Tbilisi, but your buyers will be foreigners always.
Rent yields: Looking at 8 to 13 % annum, currently, I make around 8.5% after all costs now with this long term rent for one year.
The risks:
Earthquakes (insurance does not cover that risk)
Political risk (Russia); my opinion, yes, it is a moderate risk, but even lets say Russia should invade Georgia (which I do not consider a likely scenario), would not necessarily mean that your apartments will be taken from you.
I personally consider the political risk of western left wing socialism governments dictating you prices and super friendly tenant laws and increasing property taxes and taxing the "bad rich capitalist people" much higher than this risk! I have several apartments in the leading country in Europe, and I will not invest more and even consider devesting in favor of other countries.
Fee pictures attached.
The country is beautiful, super cheap, super digitalized, investors friendly, considered among the top 5 safest countries in the world!
