Georgia: A New Star Player Enters the Arena

Georgia shocked the football world by defeating Portugal in the UEFA European Under-21 Championship’s opening game—but Georgia’s team was not the only thing opening new eyes to the growing success of this Caucasus nation and its emerging opportunities. Georgia was putting itself on display.

Modern airports, high-end residential property complexes, five-star hotels, ambitious clean-energy projects and the state-of-the-art sports stadiums where the UEFA games were played are all symbols of Georgia’s building boom.

Sports and entertainment are proving powerful showcases for Georgia to highlight its progress in enlarging its economy and attracting increased foreign direct investment (FDI). For the past two years, Georgia has posted double-digit GDP growth, with an increase of 10.1% in 2022, following an uptick of 10.4% in 2021, while FDI in Georgia jumped to $2 billion 2022, a 61% increase on 2021.

As well as attracting foreign investment, Georgia’s rising international profile is also helping to attract visitors. The number of international tourists in Georgia increased 182.5% between 2021 and 2022, bringing in record revenues of $3.5 billion last year, according to Georgia’s National Tourism Administration.

More visitors mean more places are needed to accommodate them. Post-Covid the hospitality sector is recovering; the number of accommodation businesses recorded a 69% increase in 2021 supply and number of available units surpassed 2019 figures.

Consequently, the National Statistics Office of Georgia reported that revenue generated by the hotel and restaurant industries rose from $664 million in 2021 to $917 million in 2022.

Construction booms

This growth is reflected in the country’s investment opportunities in construction and real estate. The National Bank of Georgia reports growing demand for residential real estate across Georgia, especially in the capital, Tbilisi, and the port city of Batumi.

The total number of construction permits issued in Georgia rose by 72% year-over-year to 10,822 in 2022, according to the National Statistics Office of Georgia. Analyzing construction permits for 2021–2022, the bank forecasts that the supply of property in Tbilisi will “increase significantly in the near future,” and notes that 8.8% of property purchases in Tbilisi in September 2022 were by foreign nationals. In Batumi, foreign buyers accounted for 17.6% of property acquisitions in November.

Increased interest in Georgian real estate is driving up prices. In April 2023, Georgia’s residential property price index (RPPI) recorded an 11.6% year-over-year increase in the price of houses, and the price of apartments rose by 9.3%. Demand is notably high in desirable districts of the capital such as Mtatsminda, Vake and Saburtalo. The hillside district of Mtatsminda is named after the distinctive Mount Mtatsminda (“Holy Mountain”), which towers 770 meters over the city. Vake, in the southwest, sits on the bank of the Mtkvari River, which flows down from the Greater Caucasus Mountains.

The $300 million Central Park Towers project is one of Georgia’s most dynamic construction enterprises. This collection of 25 five-star hotels, including the 144-room Radisson Blu, has been designed as a hub for international visitors. It will include a premium-brand mall, casino, spa and the first Michelin-starred restaurant in the Black Sea region.

Georgia’s Economy Minister, Levan Davitashvili, describes the project as “highly significant.” It is expected to generate up to 3,000 jobs, and Georgia hopes that its citizens working in hospitality sectors around the world will take the opportunity to bring their skills home to the domestic workforce. Central Park Towers is located in Saburtalo, close to a 36-hectare former hippodrome that is being converted into Central Park, a green leisure space.

The Georgian Parliament aims to ensure that the country’s construction boom meets sound environmental standards. To preserve green spaces and avoid chaotic development, all urban construction permits mandate the inclusion of a green project.

Georgia’s building surge is being replicated beyond the capital. In Batumi, the Ministry of Regional Development and Infrastructure is supporting construction projects across the 2,000-year-old city, including a kilometer-long coastline boulevard. A similar walkway is being built at the Black Sea resort of Kobuleti.

Investment in infrastructure

The UEFA European Under-21 Championship further strengthened the construction sector, with a $40 million government investment in renovating stadiums and sports facilities in cities across the country, including Kutaisi, Batumi, Kobuleti, Tskaltubo and Tbilisi.

Georgia’s economy is benefiting from its gateway location on the key Middle Corridor trade route between Europe and China. Its large portfolio of free-trade agreements with leading global economies gives it access to a market of 2.3 billion people. The World Bank forecasts growth of 4% in 2023 and 5% in 2024, making Georgia a top-performing economy in the Eurasia region. In Q1 2023, it beat that forecast with growth of 7.2%.

Georgia is also proving to be highly skilled in marketing itself on the world stage, and it has become an increasingly popular destination for international visitors, including elite athletes and sports fans. Earlier this year, it staged the 2023 Freestyle Ski and Snowboard World Championships in the Caucasus mountain resorts of Bakuriani and Gudauri. The travel sector is taking note; Georgia was host of ITB Berlin 2023, the world’s largest tourism trade fair.

Georgia’s global profile is also being helped by the success of its sports stars. Georgia’s rugby team is excelling on the international stage, and its judo stars, Luka Maisuradze and Lasha Bekauri, lead the world. Georgian footballer Khvicha Kvaratskhelia helped lead the Napoli soccer team to the Italian league championship in 2023.

Seizing the moment, Georgian Prime Minister Irakli Garibashvili has announced plans for a “new, modern, international-class airport” located at the site of the former Vaziani military base, 20 kilometers from Tbilisi. The aim is to turn Georgia into an aviation hub for the entire region. A signal of an ambitious country ready to take off, this could be Georgia’s most important construction project yet.