Research & Insights

Retail Market Snapshot

Retail sector has experienced no significant shifts in the third quarter. Shopping centers continue operations steadily with pipeline for new shopping areas being limited to the extension of City Mall Saburtalo, which is set to open on the 26th of October and add 45,000m2 of GLA. In terms of demand, devaluation of GEL continues to threaten the sector, as well as the economy at large, but shortcomings in the local demand are made up for by the tourism revenues. Shopping is one of the most popular tourist activities, especially amongst the visitors from neighboring countries such as Azerbaijan and Armenia; consequently spending on retail makes up 67% of total tourist expenditure. Tourism has been growing over the past quarter, regardless of the adverse effects brought on by the Russian flight ban imposed in early July. More than 3.723 million visitors came to Georgia between July and September which is a 4% growth over the visitor numbers in Q3 2018. This positive development bodes well for the future of retail sector. 

Hospitality Market Snapshot

Visitor to population ratio for Tbilisi in Q3 2019 stood at 1.18; countrywide, this ratio was 0.74. Tbilisi remains the most popular destination. In this quarter, more than 1.17 million visitors came to the Capital. The country on the whole hosted 3.723 million tourists. In spite of the Russian flight ban, the number of visitors y-o-y has increased. Between Q3 2017 and 2018, the growth rate was 9%; between Q3 2018 and 2019, it was 4%. The top tourist supplier markets remain the neighboring countries and Ukraine. However, what the situation since July has shown is that Georgian tourism is in need of diversification. Diluting the share of visitors between different geographies will reduce the economic risk that relying on only a number of them creates.

Office Market Snapshot

Third quarter saw an increase in the pipeline of the office spaces. As previously, there is no demonstrable increase in demand; the new entrants in the form of large international companies are lacking. However, the tendency to renegotiate existent contracts or negotiate new contracts to move in newly built and renovated business centers has been on the rise. Presently, the total modern office space in Tbilisi is estimated to exceed 180,000m2 with the city-wide weighted average vacancy rate standing at 12%. The supply will further increase with the addition of at least four more business centers, which will provide a further downward pressure on the pricing.