The FINANCIAL — Shalva Chkhaidze, Sales and Marketing Director of Sarke Research Ltd., explains why real estate in Georgia is more expansive than in Eastern Europe.
A new study by Sarke Research reveals that real estate prices in Georgia are considerably higher compared to the Eastern European indicators. Top class office estate in Tbilisi is more expensive than in Warsaw and Budapest.
“The construction business is the fastest growing sector in Georgia. It attracts a multitude of investors, which on its side makes realty prices higher and higher every year. Although in Georgia the real estate business is strongly influenced by political risks, investments in the area have a very steady pace as in the people’s perception this sector will never lose its value. Still, it is difficult to find a real top market product in Georgia.”
According to the Statistics Department of Georgia the average living estate in Georgia is just 16-17 sq.m, whereas in Eastern Europe the figure equals 36 sq.m, which can be taken as an indicator that the Georgian market might not be saturated enough. 30% of all the flats built in Georgia are for the top end of the market. The shares of newly built flats consists of just 1/3 of the overall market. The rest of the market is represented by old blocks of apartments.
Q. How could you explain the fact that there’s still a boost demand on real estate in spite of the low social environment in the country?
A. The increase of demand is supported by different factors amongst which there is the economic development of the country, the improvement of people’s living conditions, and the depreciation of old constructions.
The demand for middle and lower class products is much higher than that of the top class. The competition in the middle class is also much fiercer. The products of this category resemble one another. As a result, the organization that breaks this monotony by introducing something new will successfully increase its market shares.
The “white constructions”, mostly offered to the highest income customers today, is not a premier market product. The latter means the creation of much more comfortable conveniences in flats. However, more and more families wish to move from old constructions to new fashionable ones.
Q. What are the measures local construction companies should take to become more competitive?
A. Georgian construction companies might need to be better versed at using marketing tools to become more competitive. One company may be constructing buildings for both premium and lower markets. As a result, they might be confusing their potential customers. Marketing tools like brand positioning, product differentiation and strategic pricing should be utilized to avoid problems as a lack of brand loyalty and low sales figures blurs the company’s image.
In spite of this, as well as other flaws in marketing the construction sector has showed a four-fold increase since 2003. The Georgian construction business is booming. It has engulfed not only apartment blocks, but commercial areas – there is an increasing demand for 5 star hotels (even though so many hotels are being built), retail sales stores, warehouses and office buildings. This atmosphere will remain the same at least during the next decade, unless it is not disrupted by significant political disorder.
Q. How long have you been in the research business and what’s the main reason for why Sarke got interested in conducting construction related researches?
A. Since Georgia has been experiencing a fast-paced business growth and has been on track towards irreversible integration with the world economy, Georgian businesses face a plethora of new challenges. Today, it is impossible to run a successful business without utilizing marketing, information and broadly speaking, integrated communications technologies.
A growing demand on consultancy services and search for multifaceted solutions led to the acute need for the creation of a new analytical centre – Sarke Research. The latter was founded in September, 2007. It brought together a team of business consultants, media analysts, marketers and psychologists, as well as experts from political and sociological think-tanks.
Sarke Research is a multi-sector research institution that employs integrated information tools to design matrixes for media monitoring, media analysis, marketing, sociology and to conduct analytical interpretation of empirical data.
Sarke Research was established in September, 2007. It is a component of Sarke Consulting Group.
Sarke Research is in the process of acquiring certification of ISO 9001-2005 management standards. The certificate is expected to be awarded in August, 2008.
Modern marketing solutions require strong intellectual resources and ample professional experience. Sarke Research is proud to have such resources at its disposal. It employs the most experienced sociologists, mathematical analysts as well as graduates from some of the best business schools of Europe.
Q. According to what criteria do you choose research directions?
A. Sarke Research is a commercial organization and it works on researches ordered by the customers. Thereby we are entrusted by our customers to conduct market researches for them. It’s not up to us to select our customers.
Sarke Research utilizes sociological and marketing research tools – Business 2 Customer, Business 2 Business and Phone Polling.
However, its major Critical Success Factor is the West European knowledge tank and the experience that the company acquired by hiring MBAs from some of the most prominent business schools of Europe.
The final documents of Sarke Research no longer have a sociological twist, which is the case with most research companies in the country. We’re now strictly business strategy oriented.
Q. What was the very first research conducted by Sarke Research?
A. The first research to have been conducted by Sarke Research was construction business research, in 2007. However, we have to underline that the professional development of the employees of Sarke Research goes much deeper than this. The professionals employed at Sarke Research have rich experience in conducting projects in various areas: business, politics and NGOs (Non-Governmental Organizations).
An incomplete list of the successful projects conducted by the company staff includes: Siberian Cement Holding (Russia), Industrial coalition SOK (Russia), Tbilisi mobile phone market research, Real estate development market evaluation in Georgia, Georgia’s IT market, Political Preferences in Georgian Society (2008), Exit Poll in 2008 Presidential Election, Political Preferences in Georgian Society (2007), Exit Polls in 2006 local Self-Governance Elections, Airline business market research of the CIS states for Qatar Airways.
An incomplete list of undergoing research projects is the following: Telavi Wine Cellar, Monitor Studio, Rompetrol, I. Chavchavadze State University, BasisBank, Georgian Young Lawyer’s Association (GYLA), Eco-Food, Geocell, Kartu Bank, Mobi LLC, The Parliament of Georgia, The Supreme Court of Georgia
Sarke Research corporate clients are: The Parliament of Georgia, The Supreme Court of Georgia, USAID,UNDP, Kartu Bank, Mobi LLC, Geocell, Ernst&Young Audit, PSP Richter, Gepra, Saktelekom+, National Agency of Public Registry, Department of Public Health Care, Eco-Food, Sarke Consulting, Trade House, Georgia Branch of the International Medical Care Corporation, The World Bank, Georgian Young Lawyer’s Association (GYLA), United Social Security State Fund, Georgian Auto Transport Administration, Expo-Georgia, exhibition centre, V-tel communications company, BasisBank, UGT, I. Chavchavadze State University, Rompetrol, Arsi construction company, Telavi Wine Cellar, Monitor Studio, Imedi television company, Populi, supermarket chain, Goodwill hypermarket.
Q. What’s your price policy like and how expensive are the researches?
A. The price of a single research depends on the complexity of a questionnaire, the geographical scope of the research and the number of respondents. Therefore, there’s no way to name any concrete figures as examples.
Q. Who are the experts conducting your researches? Are they independent or do they belong to Sarke Research?
A. During researches Sarke Research utilizes its own human resources. Only rarely do we invite independent experts. If there is an urgent need for an independent expert we carefully select candidates before signing temporary contracts with them.
As for the competition, there are similar profile organizations in Georgia like: IPM, ACT. They are our competitors. However, we are on very good terms with them and actively cooperate with one another.
Written by Natia Taktakishvili
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