The FINANCIAL — “The Asian Pacific region is performing the best with price increasing on average by 17.8% for real estate. The top performers remain the Asian economies of China, Hong-Kong and Singapore. These locations have had the highest price rises since the crisis with recording annual growth in excess of 24%,” said Elena Norton, head of the Russia and CIS desk at Knight Frank, the world’s largest privately owned global property agency and consultancy. Last week Redix, leading development company in Georgia, hosted Elena Norton.
“The purpose of my visit is to establish some contacts within the Georgian business community and understand how the real estate market in Georgia operates; whether there could be some cross-referrals between the Tbilisi real estate market and real estate business and Knight Frank UK business,” said Norton.
Redix representatives have said they are not planning sales of Redix real estate through Knight Frank Agencies.
“Knight Frank does not plan to open an office in Georgia. If it has plans in the future concerning this market, they will be driven from our office in Moscow. Knight Frank Moscow is like an umbrella office for all Russian CIS operations and this initiative if it happens will be driven both from Knight Frank Moscow and Knight Frank London, but for the moment we do not have such plans,” said Norton.
“Our business with Russian speaking nationals is growing, for example if we take all Knight Frank sales last year in central London 70% was sold to CIS buyers, whereas the year before it was 40%, and the year before that – 12%. We can see steady growth of our transactions with Russian CIS countries therefore we generally try to meet more people from this region and of course countries like Georgia, Azerbaijan and Uzbekistan are interesting for us,” said Norton.
Norton says that it is quite difficult to speak of a global tendency in price increase as real estate market prices are influenced by different factors.
“Australia had a combination of typically low interest rate, lack of supplies and growing population. Hong-Kong is driven by the strength of its economy, low taxes, big communities and the fact that quite a lot of companies are floating on the Hong-Kong stock exchange which makes it a very big financial market. Growth of China’s market is due to rapid expansion of the economy, plus rapid expansion of the population,” she added.
“London is very popular with Russian/CIS buyers for lifestyle, education and for business, in just London you can control 3 of the main stock exchanges, the New York Stock Exchange, London Stock Exchange and Hong-Kong Stock Exchange.
Second would probably be the South of France with quite a lot of transactions going on in that part of France. This year demand for Monaco is not very high whereas last year it was. Third most popular is Paris which is a very interesting capital. This year we will see a lot of demand for Paris and congruently prices have grown. Italy is also becoming popular – Tuscany is a very popular region. And we are registering more and more demand for Austria, especially in its ski resorts,” declared Norton.
Real estate in London is some of the most demanded not only by CIS countries but by the whole world.
The strength of demand in London is of course driven by with the weakness of the GBP and historically very low interest rates. There are many buyers from the euro zone in London
Now London is experiencing a lack of supplies, because during the crisis quite lot of developers went out of business as banks were not lending, that means development finance was not available so many developers had to stop developing due to lack of finance.
As a result this year London will complete 76,000 units, which is a very small amount of units for London because normally, according to a survey London has to start between 116,000-200,000 units per year to satisfy demand. So we can predict that there will be a shortage of stock. Demand is high for the weak GBP and other nationalities will be trying to take advantage of the situation in London,” declared Norton.
Knight Frank has offices in 3 CIS cities, these being Moscow, St. Petersburg and Kiev.
“The Moscow residential market is doing really well, last week some agents were selling at close transaction levels which is a very good indicator of rivalry after the crisis,” declared Norton.
We do have an office in Ukraine. Our Ukrainian office is quite a young office and was established 3 years ago. The office was not transactional until recently, just providing pure consultancy services – consultancy and development advice evaluation. Last year we started doing international residential and at the same time the office started taking instruction to sell property and sell country houses around Kiev and some high profile instructions in southern Ukraine,” she adds.
The FINANCIAL contacted construction companies about the current situation and the demand for real estate.
“I don’t have a recent market study. However the residential projects have been suspended because of a lack of demand for high-end residential products. We hope that banking credits will be cheaper and more affordable for our potential clients in the near future and demand will increase,” said Lika Dolidze, Director of Development Solutions.
“We are currently concentrating all our activities on our ambitious project in Batumi, building the Radisson Hotel Batumi. It is currently being constructed at a good pace and the works being done are of the highest quality. Due to the ambitious deadline we have currently suspended our other projects, which will be restarted next year,” said Dolidze.
“The global crisis in general had a huge impact on the real estate market. From the sales side there is quite a difficult situation in the whole of Georgia, however compared to the previous summer there have been some positive developments.
We are proud to say that Redix is the only development company in Georgia which did not stop construction despite the war and the crisis. The mix type public-dwelling complex Business centre on Vazha and business centre Tabidze 1, and the building of hotels in Sighnagi and Telavi will soon be completed.
In the nearest future we plan to start building a hotel type dwelling, at present there are works being done on the project. The hotel and dwelling complex in Ortachala has the same status,” declared Mzia Sharashidze, Public Relations Manager at Redix.
Megi Sarishvili, PR Manager of Kalasi, declared that since they participated in the City Hall project there are almost no houses left for sale.