Research & Insights

Retail Market Snapshot

The second quarter of 2019 continues to be a steady period for the Tbilisi retail sector. Shopping centers continue to be the preferred shopping destination; however a couple of new entrants have diversified the high street tenant mix. The latter suffers as the vacancy rates slowly inch upwards. The slowdown in the tourism inflow that has registered since June will affect the retail market, however the effects may not take hold until the end of the following quarter. Rent rates remain virtually unchanged as does the pipeline of projects. E-commerce is gaining greater prevalence than ever.

Office Market Snapshot

Office market in Tbilisi continues to evolve at a rapid pace, in spite of lack of demonstrable increase in demand. Over the last quarter, the rent and vacancy rates did not experience major changes, no new additions to either supply or the tenant mix have been reported, however the pipeline has grown even larger. Over the next two years, the A Class office stock is expected to increase by more than 48,000m2 which will apply a downward pressure to the prime office rents. However, should the demand side remain inert, the vacancy rates at these new developments may - within the short term - peak. 

Hospitaliry Market Snapshot

One of the defining moments of the Q2 2019 happened on the 20th of June, when the Georgian public became aware that a Russian MP chaired Inter-Parliamentary Assembly on Orthodoxy from the seat of the Chairman of the Georgian Parliament. Protests ensued, followed with a verbal tirade of a journalist against the President of the Russian Federation. In retaliation for the peaceful protest of the occupation, Russia adopted sanctions; in particular, a ban was issued, stopping direct flights between Georgia and Russia starting July the 8th. What has been designated as the “Gavrilov Effect” will have greater implications for the following quarter, however some of its effects were felt by the hospitality industry even in the Q2. Slowdown in and cancellation of the number of bookings from Russia started after the ban was announced, however, as a whole, the Q2 numbers indicate a growth in the travel and tourism industry.