Georgia’s Real Estate Development Sector: Trends, Risks, and Opportunities in 2026

Macro Context: Growth with Normalisation

Georgia enters 2026 from a position of strength, but the era of explosive post-pandemic growth is over.

The World Bank projects economic growth of 5.5% in 2026, following roughly 7% growth in 2025, signaling a shift from exceptional expansion to a more sustainable trajectory. IMF-linked forecasts similarly indicate solid growth around 6% in 2026, supported by services, manufacturing, and ICT, while construction shows signs of cooling.

Implication for real estate: 2026 will not be a boom year - it will be a selection year. Capital will concentrate in high-quality projects and locations, while mediocre developments will struggle.

Market Reality: From Expansion to Segmentation

Residential Market

The Tbilisi residential market has entered a phase of moderation after years of rapid appreciation.

• Average apartment prices continue to rise, but growth is slowing; annual increases have moderated after strong gains earlier in the decade.

• Average price levels across the city have shown modest annual growth (around 4% in recent data).

• Demand remains stable, but affordability pressures are rising due to higher mortgage burdens.

At the same time, construction activity is sending mixed signals:

• Residential permits declined and completions dropped significantly, indicating supply volatility.

Key trend:The market is no longer uniform. It is splitting into three segments:

1. Prime and lifestyle-driven assets (strong demand).

2. Mid-market mass housing (stable but vulnerable).

3. Low-quality speculative supply (structural risk).

   
   

Commercial and Hospitality

Commercial real estate and hospitality are increasingly strategic for foreign capital.

Hotels, serviced apartments, and mixed-use developments are gaining attention due to tourism growth and yield potential, while rental yields in residential assets are gradually declining.

Interpretation: Investors are moving from pure residential speculation toward operational real estate with cash flow logic.

Structural Shifts in Development

From Volume to Quality

The Georgian development market historically prioritised volume:

• rapid construction

• limited differentiation

• weak urban planning

Now the market is forcing a correction. Buyers increasingly prefer:

• branded or concept-driven projects

• architectural identity

• integrated amenities

• ESG and sustainability features

This shift is also visible in the growing demand for premium districts and new development zones around Tbilisi.

Supply Risk: The Silent Threat

Issued construction permits continue to grow, signalling potential oversupply.

This creates a critical risk:

• If demand slows even slightly, price stagnation or correction becomes inevitable in non-prime segments.

Professional conclusion: Georgia does not face a bubble yet.But it faces a structural imbalance between quality demand and average supply.

Capital Profile Transformation

Georgia’s real estate capital is evolving:

Past decade:

• diaspora buyers

• regional investors

• speculative capital

2026 onward:

• institutional investors

• GCC capital

• EU lifestyle buyers

• boutique funds

This shift explains why “average” projects will underperform, while well-positioned assets will outperform the market.

Strategic Outlook for 2026

Opportunities

1. Prime urban real estate - Premium districts in Tbilisi remain undervalued compared to peer cities, despite strong demand.

2. Hospitality and mixed-use - Hotels and branded residences represent one of the most resilient investment classes in Georgia.

3. Land banking and urban expansion zones - Peripheral districts and emerging locations show growing transaction activity driven by development pipelines.

4. High-end residential and lifestyle projects - Luxury and concept-driven developments benefit from global buyer interest and limited supply.

Risks

1. Oversupply in mid-market housing - This is the biggest systemic risk.

2. Yield compression - Rental yields are declining as prices rise faster than rents.

3. Affordability pressure - Mortgage-to-income ratios are rising, weakening domestic demand.

4. Geopolitical and regional volatility - Growth is expected to slow due to external factors affecting the Caucasus region.

Strategic Conclusion: What 2026 Really Means

2026 will not reward “developers”. It will reward strategists.

The Georgian real estate market is transitioning:

• from growth-driven to value-driven

• from speculative to operational

• from local to international

Projects with weak positioning, generic architecture, or unclear investment logic will stagnate. Assets with narrative, location, quality, and operational viability will outperform the market.

In simple terms: Georgia is no longer a cheap market. It is becoming a selective market.