Every month, thousands of apartments are sold in the seaside town of Batumi, and interest is also growing in nearby Kobuleti. Money is flowing in from all over the world, and Europeans are also starting to buy apartments here. The financial return is much faster than in the Czech Republic.
“The demand of foreign investors for projects in Georgia is growing every year. The biggest interest so far is in Batumi, where more than 1,000 apartments are sold monthly, 36 per cent more than last year. Money is flowing in from all over the world, mostly from Turkey and Azerbaijan, but also from Great Britain, Israel, Poland, Scandinavia, and the Czechs are joining in,” says Adjara’s Finance Minister Jaba Phutkaradze. “We are now focusing on other areas, such as the seaside town of Kobuleti, whose tourist arrivals have increased by 26 per cent since last year,” he adds.
In Kobuleti, a resort on the Black Sea coast covered with pine groves and unusual black and healing sand, the Czech hotel Magnetic Beach Resort opened in August this year. The project is backed by the První investiční and is not only an opportunity for an unusual and novel holiday but also a unique investment. It operates as an apartment hotel, in whose individual rooms – apartments – a private investor can put his money.
A worry-free investment
In practice, this means that there are different types of fully equipped and modern apartments to choose from, which vary in size, with a square meter costing between $3,750 and $4,500. It is possible to buy an apartment here for as little as $138,285, or about CZK 3,250,000. “The owner then entrusts the apartment to us, we rent it out as part of a five-star hotel, and we also look after it and service it. Therefore, the owners are relieved of the hassle and just collect the rental profit. All owners have the same earning conditions,” explains Petr Zapletal, Chairman of the Board of Directors of the První investiční and operator of the Magnetic Beach Resort hotel complex.
The hotel has been operating for only a few months, and 40 per cent of its guests are Georgians. However, the project is targeting the Czech Republic for investment. “Magnetic Beach Resort has 129 apartments at the moment, a quarter of which are already sold, and we have another half pre-booked. Most of them are Czech investors and owners,” says Zapletal.
The two hotel buildings with apartments, a swimming pool, and a restaurant required an initial investment of $14 million. Initially, it was supposed to be just a Czech investment in the Georgian project, but První investiční eventually decided otherwise. “We did not want to build according to the original project, so we bought it and finished the construction in our own way, according to the highest European standards,” says Petr Zapletal. He took charge of the project together with his wife, Daniela, who became the main designer.
The main reason for this was that Georgian buildings are often of poor quality, and after a few years, it shows. “We wanted to make a hotel that not only looked great, but we insisted on using the best quality materials, which we often imported from the Czech Republic or other parts of Europe, and we wanted to insulate the building, which is unusual for local conditions, but very effective in terms of future energy savings,” adds Daniela Zapletalová.
More and more tourists are coming to Georgia, particularly Adjara, the coastal region where both Batumi and Kobuleti are located, which is 35 per cent dependent on tourism. Travellers are attracted not only by the aforementioned and usually pleasantly long black beaches but also by the modern architecture in Batumi or, on the other hand, the unspoiled nature in the mountains. The closest to the coast is the Bakhmaro area, but you can also go to the Greate Caucasus, where the conditions are perfect for skiing in winter.
However, it is not only the beauty of the Georgian landscape that plays into the hands of investment but also the local economy and business conditions. In the prestigious Ease of Doing Business ranking, which assesses the country’s friendliness for entrepreneurs and is part of the World Bank’s annual Doing Business report, Georgia ranked 7th in 2020, while the Czech Republic came 35th.
“We have calculated and tested the return on investment for an apartment in Georgia within 12 years. When we compare any investment project in the Czech Republic, we are talking about a period of 30 years or more. We can add to that the outlook and the rate at which real estate is becoming more expensive in Georgia. Over the last five years, property prices in the Kobuleti area have increased by 15 per cent year-on-year,” says Petr Zapletal.
Moreover, Georgia’s public administration is precise and minimally bureaucratic. Buying and transferring a property here takes less than an hour, there is no property transfer tax, and buying a property gives the buyer the right to obtain a permanent residence permit. Georgia also has a double taxation agreement with more than 50 countries, including the Czech Republic, and since 2014 a duty-free free trade agreement with the European Union. Nevertheless, investing in Georgia is also beneficial for non-EU countries, which have only a 5 % tax on profits.
See more about the Czech hotel Magnetic Beach Resort here.
More information about the První investiční company is here.