Return on Investment in Tbilisi – High yield Real Estate
I often hear that people are looking for high yield rental properties but want to invest as low as possible. What we need to understand that property price is in direct correlation to property rental yield. Prices of some properties are higher and it is more demandable because it is supposed to be less risky and high yield property. So cheapest property on the market and highest yield property is not often compatible. Cheap property for sale often times are riskier in terms of Investment. It might yield high but it is associated with higher risk. Our goal is to leverage between the risk we take and opportunity of investment return. It all depends on our goals at the end. Would you like to invest more now and feel less stressed when you sleep or you prefer to take higher risk and may more likely be tempt to lose your money which is so hard to collect? Considering all above mentioned concerns I divided Tbilisi in three main real estate districts:
And calculated for you average market prices and possible rental yields. Go ahead and find the details and come back when you finish reading It. Now as you are familiar with Tbilisi market let me introduce you to Batumi.
How much return on investment should you expect in Batumi?
Looking to buy a house in Batumi? Before you proceed and search for Batumi condo houses for sale make sure you understand the Batumi Real Estate market. That’s the reason I am writing this blog. Most of my readers are looking for beach front properties for sale in Batumi. Therefore I will be considering sea view flats here, which are made for investment. How much of yield should you expect from nicely located flat in Batumi on the first line of the beach? How much of Rental Income Should you realistically expect from your Batumi Property? Based on Most recent observation I concluded following:
Note: Below Prices are given in USD for your convenience.
In my example I assumed that investment amount is 35 000 USD and calculated total real estate investment value, extracted expenses and calculated net profit – return on investment based on that. Now, If you wonder what kind of flats you can purchase for 35 000 you can see this.
|Annual Return on Investment||11%|
Prices of flats for sale in Batumi
I weekly analyse market and shortlist the data to 6 most profitable deals in terms of ROI and not only. Thinking about real estate investment you need to consider risk associated with investment as well. As Batumi is sea-side resort which host most tourists during summer beach front flats are most likely to be rented out. Other apartments are rented after. Similarly apartment prices lowers as you go further from the sea. Apartments selling price is lower further from the sea as well. You may even find apartment for 500 USD per sq.m in the outskirts of Batumi in an old building. Beach front apartment prices start from 1000 USD. If there is huge market crisis obviously sea view apartments suffer less.
Is investing in Batumi real estate less risky than Tbilisi property Investment?
Capital city always is associated with less risk factor. Obviously in case of major market crisis capital is always less affected. If you invest in Tbilisi central area, obviously your investment is secure, less risky. Batumi is highly depended on the season. There is still possibility to rent out flat offseason, but as you have probably compared in the graph rent fee for Batumi property in comparison with same size investment flat to Tbilisi is less. However on season compensates this and as a result shown above Batumi and Tbilisi Annual Rental Yield does not display huge difference. In addition to that, I can say that in Georgia there is relatively stable real estate market prices. Batumi is rapidly hosting more tourists each year. Your investment should be strategically planned taking into account the regional development plan. Also you should keep in mind that Batumi is not a huge city and coast is really limited. Apartments are rapidly building now and we see lowest prices on the market but at some point there will not be any more place on the first line of the beach so demand will start increasing. Governments try to give more importance to regions and always tend to implement new projects to develop regions, including Batumi and Adjara. There are several huge projects planned. Before making wise investment decision, taking more risk in a sake of more profit sometimes can be a good idea.
Which Property is the best to Invest in Batumi?
Most people looking to invest in Batumi Real Estate often think to buy condo house, or one bedroom studio flat. Did you ever consider commercial space? If I would be investing right now, I would definitely go for commercial space. By commercial spaces I do not mean offices, there are real estate properties used by shops, banks, pharmacies, bars and restaurants. Even if there is no tourist in the city there will be still demand on this kind of property in the market. A good commercial property might be your risk free investment in Batumi. Now, well obviously price per sq.m for commercial properties are higher than for flats for sale, but in terms of ROI commercial space give the same or more ROI with less effort. Your tenant is some business not an individual so it is relatively stable for you. Considering property investment alternatives in Batumi, don’t miss out commercial space deals. It’s worth to be paid attention.