In recent years, investments in foreign real estate on the seaside have become more popular in the world. Such activity on the foreign real estate markets is conditioned by many factors - the affordability of real estate in these countries, the possibility of profitable letting, as well as the advantages of obtaining a temporary or permanent residence permit in the state for themselves and their family members.
The Universal Declaration of Human Rights in Article 17 states that everyone has the right to own property, both individually and with others. The national law of most European countries provides for the possibility for foreigners and stateless persons to acquire, inherit and bequeath, in accordance with the legislation of property and to have personal non-pecuniary rights. Thus, according to Art. 26 of the Constitution of Ukraine, foreigners and stateless persons who are legally in Ukraine enjoy the same rights and freedoms and carry the same responsibilities as citizens of Ukraine. Article 47 of the Georgian Constitution stipulates that foreigners and stateless persons have equal rights and obligations with Georgian citizens, except as provided in the Constitution and law.
In recent years, tourism and real estate on the Black Sea coast, in particular in Georgia, has been in incredible demand among Europeans. It should be noted that tourism is an important component of Georgia's economy and accounts for more than 7% of the country's GDP. Tourism has a major impact on strategic sectors such as construction and trade. Last year, 8.5 million tourists visited Georgia, with $ 3.4 billion in tourism revenue. It should be noted that for the state with a population of just over 4 million people, these figures are impressive, in the past ten years ago tourists were only 1.5 million a year. Today, the government has the ambitious goal of increasing the flow of tourists to 12 million a year, and, accordingly, increasing revenues from tourism activities to $ 6.6 billion.
Since 2010, in the process of cooperation with the European Union, Georgia's image on the world stage has significantly increased and improved its investment rating. According to the latest Doing Business, Georgia ranks seventh in the world in ease of doing business. And the amount of financial and technical assistance to the state exceeds 100 million Euros every year. In June 2016, the EU-Georgia Association Agreement and the Free Trade Area Treaty came into force, and since March 2017 Georgian citizens have been granted visa-free entry to the Schengen States.
Such also led to popularization of the state, attractiveness to doing business, investing in the economy, infrastructure and real estate. According to statistics, this is a stubborn thing, and says that over the past few years, foreigners have purchased more than 34591 apartments worth $ 1.6 billion in the Georgian capital alone. Most new owners gave preference to real estate in new buildings (65% of all transactions). In Adjara, a resort region on the Black Sea coast, more than 3,000 residential real estate purchase agreements have been concluded.
The most common purpose of purchasing real estate in Georgia in recent years has been to invest in savings for the purpose of future leasing. At the same time, there are frequent cases where real estate is purchased for the purpose of obtaining a temporary and then permanent residence permit. For such purposes, the appraised value of the property purchased, in accordance with applicable Georgia law, should be $ 105,000 on the date of application for a temporary residence permit.
And of course, some of the new owners buy real estate for themselves either to improve their living conditions or to move to another region. Interestingly, foreigners are increasingly becoming property owners in Georgia for the purpose of moving to the state for business, permanent or seasonal residence. For this purpose, the capital of Tbilisi or the resort regions, including Adjara, are best suited. It is in the resort regions of Georgia that the most popular among buyers are apartments in hotels, which allow owners to have a passive income 365 days a year and a yield of up to 12% per annum.
The popularity and attractiveness of the Georgian real estate market is also conditioned by affordability, lack of linguistic and cultural obstacles, good warm climate, national hospitality, relatively simple registration of the sale and purchase agreement, possibility to obtain a delay from the developer, state guarantees for timely completion, state guarantees for termination systems of registration of real property rights in general, and property rights in particular. For example, according to Art. 208 of the Civil Code of Georgia on the basis of the acquisition of an apartment, house (real estate) in the property - is to make the transaction in writing and to register it in the Public Register (the Public Register is a collection of information about the occurrence of the right to property and intangible property, seizure and occurrence of a tax deposit (mortgage), modification, termination, as well as the occurrence of renunciation of property rights and making such changes).
Another advantage of buying real estate in Georgia is the absence of a mandatory declaration of funds, which are paid as payment of the contract of sale, the absence of real estate tax and the possibility of obtaining a temporary residence permit in a simplified manner, of course, subject to other requirements of the law Georgia (for example, legal stay in its territory, non-compliance with offenses, etc.). For comparison, in most European Union countries, foreigners wishing to purchase real estate will be required to have the relevant governmental authorities make the transaction, as well as the obligatory financial declaration of the origin of the money to be paid in the purchase contract. Even with the status of temporary or permanent residence in most states, there is no attachment to real estate, that is, even if the foreigner is the owner of the real estate, for example, in Ukraine, Poland, Germany, Spain - this does not mean that you can get a simplified procedure residence permits.
If we will talk about real estate investments apartments in hotels are becoming more and more popular in Georgia. According to the most modest expert estimates, the investment value of apart hotels today is over half a billion US dollars. The advantage of these types of investments is, first of all, their reliability, as the Georgian legislation clearly regulates the state guarantee and support of the development companies against the possible risks during the construction and commissioning of the construction sites. Secondly, this type of investment has a high percentage of return - an average of 9-12% per annum. Third, such apart hotels are often run by well-known companies in the world, such as Courtyard By Marriott and Wyndham Hotels & Resorts, which has the world's largest franchise network on 6 continents in 80 countries and combines more than 9,000 hotels, 792,000 rooms and 20 hotel brands. And also is a leader in international hotel management and has a loyal hotel program of over 56 mil. people around the world. By the way, such apartments in hotels as an investment are also popular at the winter ski resorts of Georgia - Gudauri and Bakuriani, where in 2023 will host the World Championships in freestyle and snowboarding.
Thus, Georgia today has great potential for investment, tourism, construction and related infrastructure.
About the author
Oksana Khorvatova - Lawyer,
PhD in Law, Associate Professor,
Managing Partner of International Company «GEH»,
Foreign real estate market expert