The FINANCIAL — Pixel 34, the first A+ class mixed-use building of its kind will open its door to customers for the first time this summer. The estimate cost of the project is USD 40 billion. In an interview with The FINANCIAL Mr. George Getsadze, director of Pixel 34 speaks about the future of Pixel 34 and commercial real estate in Georgia.
“Currently the situation regarding real estate business is difficult. Transactions are almost always being interrupted. This is easy to understand taking in to consideration the background of the buildings under construction. Further development of the construction business will depend on the economical situation in Georgia and worldwide.
The development of market activity is expected in the autumn and winter of 2009. As the supply will be shortened due to the current situation the supply-demand ratio will become more adequate and this will help stabilize the market.
Usually a crisis affects mostly the real estate of the lower level which is less attractive and less profitable. The crisis influences much less expensive real estate and limited projects.
Before starting the project Pixel 34 we conducted extensive market research which showed that businesses in Georgia are growing and developing, and so we expected even higher demand for commercial spaces than we had before starting our project.
We were focused on completing the Pixel project earlier than others. Office space has already been sold 100% to the Latvian company. The commercial space that is under our management is planned to be rented. These days rent transactions are going much better than sell.
Q. What is the volume of investments in PIXEL?
A. We invested under USD 40 billion in the project of Pixel 34. Pixel has already sold 95% of spaces. From the commercial space 35% is left. Currently only inside remodelling works are left to be done. We think that the trading part will start working this summer. As for offices they will start working later, it depends on the decision of the current owners of these office spaces. The cost of one square metre of commercial space in Pixel 34 was USD from 10 to 12,000. After the beginning of the crisis we made some modifications and reduced prices by 5%. We have fixed the price for rent space in Pixel at USD 100 per square metre.
Q. Do you consider the global financial crisis when evaluating PIXEL’s financial future?
A. Perhaps the crisis raised the number of office space offered for rent but this fact does not represent the real picture of the entire market. Most organizations are still renting spaces in residential apartments. If all of these companies decide to move into business centres we will face a lack of such places.
Q. In spring 2008 prices of real estate in Georgia reached a peak, whereas after the beginning of the crisis real estate started losing its value. What is your outlook, should we be expecting a return to pre crisis prices in the construction business any time soon?
A. It is hard to say at which time the dynamic of prices for real estate will start returning to its previous situation. I don’t think that prices of real estate and commercial spaces are too high in Tbilisi. Our partners that bought spaces in Bulgaria said that in the central streets of Sofia prices of commercial spaces is USD 30,000 per square metre. If further development of the economy and political situation improves our assimilation with Europe then we’ll reach prices adequate to other countries in Europe.
Q. It is an approved method all over the world that during a crisis a country’s government launches financial support in order to keep companies afloat. What’s the situation in Georgia in this regard?
A. There are some projects that are under discussion in the city municipality to support completion of different projects. The Government should be active in supporting construction companies that have recently faced difficulties. Developing and construction companies need some additional funds. But no one should have the illusion that the Government is a charity fund and will finance without any responsibilities. We talk about the launching of funds by our government in order to help construction companies to overcome the crisis.
Q. Even a year before real estate was one of the most popular means for investing money. How do you think, will people continue investing money in this direction?
A. I think that real estate is still the main sphere to invest money in. There is some delay in these investments because of the crisis, but they can’t last for long. Real estate in Georgia is limited and this means that we should expect further development soon.
Q. What is the advantage of PIXEL in comparison with other projects?
A. Pixel 34 is an iconic building in the city. The main advantage of Pixel is its location, visual side, quality and the fact that it is already completed. The location still plays a key role for businesses. In the case of Pixel 34 it will be as commercially beneficial for businesses to be situated here as for shops. Pixel Centre is the first internationally recognized Class A+ building and the first environmentally progressive working space in Tbilisi of its kind.
The building totals approximately 33,000 square metres comprising seven floors of office space, a food court, and two floors of retail, one supermarket level and two levels of secure underground parking.
Pixel 34 has become a striking and visual landmark within Tbilisi and is considered a monument to the growing success of the city.
A+ is the accepted quality standard which means privileged location, quality, prestige and popularity of the building.
Written By Madona Gasanova
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