Investments in real estate compensates for risk premiums (compared to money deposits) and more than covers its costs (Mortgage interest rate). Average rental price for residential property continues to fall and reaches its historical minimum since March 2013.

The rental price index registered the sharpest annual decline in November 2014. Average rental and sale prices in Tbilisi continue to follow their long run trends. Average rental prices in Gldani-Nadzaladevi and Isani-Samgori have converged for two consecutive months.

In October, rental prices for residential properties in Tbilisi declined significantly in annual terms (-7.1%). Buyers tended to purchase cheaper, lower quality units in October relative to the previous month. Lower lending and deposit interest rates made real estate investments more attractive, driving rental prices for residential property downward.

In September, sale prices for residential properties in Tbilisi declined significantly compared to the previous year (-8.6 %). In terms of area, Old Tbilisi continues to lead the price index, at 1,143 USD per m2 in September.

In May, sale and rental prices for residential property in Tbilisi were lower by 4.0% and 3.3% resectively than in the same month a year earlier. The selling prices of residential property declined in May, both in monthly and annual terms. Despite this, the trend line on Chart 1 indicates a tendency towards an overall price increase since Feb. 2013.