The FINANCIAL — Selling of state-owned land has risen within the last year (2010) amounting to 150,000 sq. meters sold which is approximately 65% higher compared to last year’s 95,000 sq. meters realized.
“The price of land in Tbilisi is likely to rise in particular zones (approx. within a month) when the special commission is going to meet and set new normative prices for various areas of Tbilisi according to market demand. Although prices may stay the same in some areas of the city,” said Valerian Gvatua, head of Tbilisi City Hall Property Management Agency.
“This year’s income from privatization amounted to 17,350,000 GEL, which is more than the projected 17 million whilst in 2009 only 9 million was added to the budget,” he said.
As Gvatua says, the most preferred land type last year (throughout 2010) was that of residential zones, from which 55% of sales came.
“Except for the lands that are individually selected online, we take some territory and then pave the roads and necessary infrastructure, hereafter writing a project about it, some business plans for what it can be used for. Thereafter we take it to auction ourselves; interest in such projects is very high, especially for investors who already know what the land can be used for. But as opposed to individual purchase of land we set an investment level in this case, like investment of 1 million should be put on “X” object ( it differs depending on the project).
We have special conditions and catalogues for investors. This year 37 million GEL of land (45,000 sq. meters) for different enterprise type was purchased of an investment type where 600 people have already been employed. Recently, as an example, Vellagio purchased land in Gldani surrounding where the “Smart” supermarket network is to be built,” said Gvatua in an interview with The FINANCIAL.
“In April of 2010 lots of modifications to the auctions were made. Whereas earlier public auctions were held, now we’re starting electronic auctions via the internet which will be finished at the end of January. The latter will be very comfortable for users as they’ll have the opportunity to look through any land types through interactive maps (latest version updated in 2010). Then they can zoom, see whether the land is already occupied, and after that select any form/configuration of land and send it to us in order to evaluate how it fits the city plans. In general we don’t sell land less than 200 sq. meters long. Whereas previously people had to pay money to size the land and then go to register it or take it to auction, now it’s changed and all things are being done by us (already made electronically),” Gvatua said to The FINANCIAL.
“Once the land is registered and the commission assigns/adjusts its price, the auction starts – and any person can claim for it as long as they’ve, of course, “b’’ paid (30% of the total price) which is ultimately taken back in case of losing the auction. According to the latter no one loses by participating in the auction.
The auction is announced 15 days later once the land gets registered so during this time people can review the land on the website or see it in the newspapers and then in about 15 days the land will be given to the winner with all legal rights and responsibilities attached to it. If the auction isn’t held within these 15 days, then it goes a second round, overdue auction,” noted Gvatua.
“With the improved service now we offer 1 and 2 year instalments, free of interest in the first month, 0.5% each month thereafter,” he said.
As Gvatua noted there’s not yet high competition/bidding on land at auction. “As we’ve observed only 10% of the lands sold were competed by others at the auction.”
Online Auctions’ Rising Popularity in Georgia
The first online auction in Georgia (namely eauction.ge) was first made by service agency within the Ministry of Finance on 31 March where already 1,168,000 GEL property has been sold with 591 auctions held. (on eauction.ge). The website has 2,700 visitors daily.
As Gregor Baiburt, head of the service agency (within the Ministry of Finance) told The FINANCIAL, “The largest bid ever put on eauction.ge was that of a mill factory sold at 85,680 GEL.”
“Every month there are approximately 180 lots realized. The most popular items at eauciton.ge are jewellery, automobiles and home appliances. We’re also going to add immovable properties like purchase of land from February. Anyone who becomes interested in the auction (only over 18 years) is eligible to participate in the auction,” said Baiburt.
“As opposed to public auctions, with the help of the internet auction there are no risks of any bureaucratic procedures. Georgians from any part of the country can purchase his/her preferred state-owned property sitting at home or from any comfortable place. If having “b” guarantee amount, payment is also available via plastic card or directly paying from the site. In addition the Ministry of Finance’s auction provides moving service on particular items purchased, there’s a free debit card service as well. We’ve also opened service centres in Tbilisi, Samtredia and Akhaltsikhe which help people participate in the auctions,” he said.
“We recently signed an agreement with Liberty Bank hence any client who wants to purchase an item can get it through instalments. Additionally we’re planning to offer leasing in 2011,” said Baiburt.
As Baiburt noted to The FINANCIAL, “the New Year’s sales action has lead to 300% growth in auction sales figures”.
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