THREE CRITICALLY IMPORTANT TIPS WHEN INVESTING IN REAL ESTATE IN BATUMI

12 August 2022

THREE CRITICALLY IMPORTANT TIPS WHEN INVESTING IN REAL ESTATE IN BATUMI.

AUTHOR:IA GOGIDZE, HEAD OF SALES DEPARTMENT AT ELT BUILDING

Here below I am discussing the three main tips that are of significance importance while investing in real estate sector of Batumi, Adjara.

Investment efficiency

Based on many years of experience, hotel-type apartments are considered the most attractive means of investment in the local market, the main reason for this is naturally the growing return on investment; For the first time this year, it exceeded the benefit of bank deposits in GEL, TBS Capital Research 2022.

International investors/customers should first of all focus on the location and the reputation of the complex management company to get high returns; When investing in real estate in Batumi (and in the case of developing locations in general), two factors are decisive:

• The complex must be located within the city limits;
• The managing company must be an international brand with many years of experience and a reliable reputation.

Construction companies that build outside of the city may not be a deterrent to local customers and vacationers, due to greater convenience and a number of other reasons.

However, when we talk about investment, the number one factor is determined by location. The distance from the sea coast largely determines both the purchase and resale price, if we are more specific, 100 - 300 meters is the distance for the high efficiency of the investment;

Buildings outside the city, according to the commercial projection, will become attractive for investment only after 5-7 years, high-spending tourists (most of whom are not local), always choose a variety of infrastructure and services, proximity to tourist locations/attractions, access to healthcare and others when renting an apartment. The Turkish coastal development model cannot and does not work locally, even in the short-term season, due to promotion costs and other reasons; Batumi's development strategy is aimed at the year-round occupancy of the city-resort, in it, on the creation of the infrastructure and services that will attract the so-called tourists. "Even in the off-season"; Taking all of this out of the city is unimaginable with the current state of Georgia and local business in the coming years.

The advantages mentioned above are reflected directly and proportionally on the occupancy rate of numbers in Batumi and their selling prices. This year, for the first time, the income received from the rental exceeded the income received from the bank deposits (TBS capital).

As for the management of the apartments, in the case of our quarter, they will be managed by the American, international management company - "Interstate Hotel and Resort" and the Estonian apartment management company - "International Property Management OE".

Negotiations are in an active phase with another European company, which will be presented by the end of the year (for the new Elt Building projects planned in Batumi and Tbilisi).

From the very beginning, the main goal of the company was partnership with management companies of high reliability, because similar connections and sharing of international experience are a guarantee of establishing an effective and mutually beneficial relationship between the company and customers. Hence the fact that our existing customers recommend us for every next investment;

According to the statistics of our completed complexes of the last two years (the pandemic is also a factor to be noted here), the payback period on the investment is 7.5-8.5 years depending on the specifications of the apartment.

Project Concept

Recent years have shown that Batumi's real estate market has developed mainly in one direction. When we started building Elt Quarter, we conducted research among international and local audiences of potential investors. The results dictated our development concept, half of the money invested in the Elt Quarter is used to finance infrastructure and services.

It was in this part that we found ourselves as pioneers who started to develop the neighborhood as a concept.

With all the services available in high-class hotels, Elt Quarter together with the residential area includes sports fields, children's spaces, aqua park, concert hall, fitness center, outdoor and indoor pools, hammam/spa center, cafe-bars on the terraces, Night club, cinemas (including 9D), supermarket, pharmacy and other important areas needed for comfortable rest and living. We are developing the first yacht club in the region (where a top-class management company will also be represented), where residents and tourists of our quarter will be connected by a bridge and will receive not only the yacht club, but other additional services (small club cafes).

Elt Quarter is represented by 7 complexes and will be fully handed over at the end of 2025.

Company Sustainability

The sustainability of the company is an absolutely decisive factor when purchasing real estate, and it is also one of the indicators for creating a competitive advantage.

In Adjara and in particular in Batumi, there has been an increase in companies that implement individual projects in the name of different legal entities and in this way avoid part of the responsibility related to future risks; Our goal is not only to seek financial profit, but also to create new and different tourist locations'; All our projects are carried out under the name of one company, we take care of all the promises made, as well as the internal quality control system.

The main competitive advantage is financial sustainability, all projects of "Elt Building" are pre-financed, the financial organization "Elt Company Finance" (the largest "SGS" in Georgia, with up to 20 branches) included in the "Elt Business Group "allows us to keep the pace of construction from being tied to customers. on contributions; In the case of a financially unstable company, the construction process is fully or partially dependent on the contributions of the investors/owners.

The above-mentioned advantage allows us to be very flexible for our potential customers/investors, when offering installment terms, which sounds quite loud for the Georgian construction market - "offer us, the schedule you want."