The FINANCIAL — Iberia, a leading Georgian constructing company, is currently working on a hotel project in Bakuriani. It will be a 4 star hotel. The project will be finished in around 3-4 months.
The company already accounts six finished, five ongoing and seven planned projects which will be released in the near future. Iberia plans to open concrete, block and brick plants. The company also intends to offer alumina and metal-plastic windows and doors to its customers. Ekaterina Kamushadze, Vice-Chairman of the Supervisory Board of JSC Iberia Real Estate, definitely considers investment in the construction business cost effective and plans to increase construction capacity in the near future by investing even more in this direction.
“Iberia recently acquired land for a construction work yard and is in the process of establishing a concrete producing plant on that land,” Kamushadze noted.
In 2007, Iberia Construction invested USD 1 million in acquiring new equipment and machinery.
“Iberia Real Estate has invested in its own construction company to build mainly its own projects. We also had a third party order which we completed successfully. Having our own construction company gives us the ability to control the quality, time table and margin of our construction business”, says Ekaterina.
Iberia Hills is one of the most popular projects offered by the company and the company has been promoting this project for the last few years. In 2007 Iberia claimed that the project would be one of the most interesting for the customers. Company offers not only new apartments but a whole district.
“Iberia Hills is a very successful project for the company”, says Ekaterina. “We had individual buyers as well as professional real estate investors buying property in this development. There is high demand for this development and we decided to add a new line of houses to the district, the sales of which will start in the nearest future. A family with USD 2,500 income per month can afford to buy an apartment in this development and pay for a mortgage. Our expectation is that the number of high income families in Georgia will increase”.
Suburbs of Tbilisi
“Iberia Hills was one of the first suburban districts around Tbilisi to be developed, so we were one of the pioneers in this direction. However, it is difficult to project future trends of suburban developments. On the one hand a quiet, clean environment with less noise is attractive for family life. On the other hand the price of commuting is increasing due to increasing fuel cost and commuting time and is pushing the population back to the city. Our next housing projects will be within the city”.
Last Year Iberia planed to open concrete, block and brick plants, the company was also intending to offer alumina and metal-plastic windows and doors.
“We have made significant progress in this direction”, says Ekaterina. “Iberia has acquired a place for the plants and imported concrete producing equipment. We need around 3-4 months to finish the project.
“The Georgian real estate market is not yet at the level of European standards however the market is dictating its terms to developers and we will inevitably get there in the future”.
Turnkey apartment, white frame or black frame?
“Turnkey is new on the Georgian market and we still see a main demand for white frame therefore currently Iberia offers white frame only. However we will be carefully monitoring market trends in this direction”, Ekaterina Kamushadze says.
According to her words the company has own architectural studio and designers who help the customers in choosing interior design. This service is included in the price.
Q. What kind of architecture is recognized by the company?
A. We follow a modern, innovative architectural style with strong emphasis on environmental harmony.
Q. Can a customer get an apartment on credit and if so, which banks is the company cooperating with?
A. Yes, there are a few banks that provide credits for our projects. Bank of Georgia and Bank Republic are our main banking partners.
Q. Does Iberia have its own instalment program, what does it contain? What is necessary to get an apartment on credit?
A. Yes, Iberia offers sales on deferred terms. We have special discounts for our projects. We also offer 0% loans till the end of construction of the object sold.
Q. It is known that the interest on mortgage loans is being increased by banks, how will this effect sales?
A. It will certainly have an impact on the market. The market growth may not be as high as it was projected. However as the share of mortgage based sales were not high for Iberia we do not expect major impact on our sales.
Q. Which insurance companies do you cooperate with in terms of construction insurance? Are prices the same for commercial, residential or office estate and how much are they per sq.m?
A. Aldagi-BCI is our main partner.
Q. Have you ever claimed damages from the insurer, if so, how much?
A. No, we haven’t claimed anything so far.
“The values of our projects vary from USD 10 to 30 million”
Q. What would your advice be for people intending to buy commercial, office or residential real estate at Iberia?
A. Every customer has their own individual preferences and style. Our advice caters to their requirements. The customer that comes to Iberia is expecting a good location, modern design, good floor plan, high quality construction and flexible payment terms.
Q. Which type of advertising do you see to be the most effective concerning real estate? What media tools do you use in this respect? What’s your annual PR campaign budget?
A. TV advertising is by all means the best when promoting big projects, but outdoor advertising at construction sites together with specific ads in newspapers work quite well too. We use a mixed communication plan to promote our products.
Q. According to local construction companies there is a shortage of highly qualified staff in the sphere, is that really so and how is Iberia coping with this?
A. That is correct. As a result we train our own employees and keep our highly qualified staff on permanent contract.
Q. How many times has the price of an apartment increased compared to previous years, what is expected in the upcoming future, and according to which criteria are construction prices defined?
A. The prices of Iberia projects follow market trends. They have been increasing rapidly over the last few years. We expect prices to continue to grow at a slower pace. Market demand for residential construction still exceeds market supply. Our calculations show that Tbilisi needs about 12 million sq.m to reach Eastern European standard of leaving. Current construction projects account for only 2 million sq.m. This does not take into consideration the fact that most housing stock needs to be recycled. Of course demand depends on Georgian economic performance.
Iberia is currently working on a 4 star hotel project in Bakuriani.
Ekaterina Kamushadze says that most of company current projects are positioned as luxury segment projects, for example project on Abashidze St., Radiani St. and Iberia Hills. “They are expensive but we are still managing to sell them”, Ekaterina says.
“The values of our projects vary from USD 10 to 30 million. Iberia Hills was one of the first suburban districts developed around Tbilisi, so we were one of the pioneers in this direction. However, it is difficult to project future trends of suburban developments. On the one hand a quiet, clean environment with less noise is attractive for family life. On the other hand the price of commuting is increasing due to increasing fuel cost and commuting time and is pushing the population back to the city. Our next housing projects will be within the city”.
Professional advice to customers
“The quality of Iberia’s construction is very high and meets international standards. In addition the exterior design is modern, and floor planning is very convenient. So we advise the customers who are planning to purchase an apartment to pay attention to all of the above details and make the right decision. We certainly welcome them to Iberia’s sales office”.
Written by Natia Taktakishvili
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