Sector Analysis

The recent boom in the demand for residential and commercial space has made construction one of the fastest growing sectors of the economy. Government reforms (outlined below) are facilitating this growth.  In addition, the rapid development of mortgage financing is powering the purchasing ability of customers and creating a much larger market than previously existed.
Construction companies operating in Georgia are working to meet a great deal of pent-up demand for new, high standard, modern living accommodation, office and industrial spaces.
Value Added generated in the construction sector in 2006 represented approximately 2499 million USD, that is approximately a 63% increase over the previous year. In 2006, the construction sector’s turnover totaled approximately 7006 million USD, which represents approximately 44.5% increase over the previous year. Further, construction in Georgia enjoyed high rates of output over the past years (total output of the construction sector in 2006 has risen by 58.8% over the previous year and represents  7377 million USD).

Note: exchange rate for 2007-12-21 USD/GEL - /1$=1.6060 GEL/

The residential market in Georgia is developing quickly, with high construction activity and growing prices. The residential market has become highly speculative in the absence of efficient saving mechanisms, with individuals buying flats as an investment. Advance payment schemes are popular in Tbilisi’s demand-driven residential market. The most common mode of payment is mortgage loan at the rate of 14%. Despite these high rates, banks are increasing their loans for the sector.

Several large construction and development companies currently operate on the Georgian market, some of which are foreign owned.  Some of the better known companies include: Axis, Arsi, Center Point, 7 Sky, CI & D Architects, Module, Iberia, Aword, Paladi Palace.

Cement is a competitive local building material, while other building materials are imported from Turkey, Iran, United Arab Emirates, Russia and European countries.

Impact of Government Reforms

The Government's Liberalization Program assigns special importance to streamlining and liberalizing the regulatory environment affecting the construction business.

• Licensing and inspection system. Significant reforms have been carried out in recent years to simplify the system of issuing permits in the construction sector. As a result, procedures are simplified; a "one-stop-shop" is responsible for issuing permits before a statutory time limit, after which silence means consent.
• Standardization and technical regulation. According to the implemented reforms, construction businesses now can use the technical regulations of OECD and EU member countries acknowledged by the Government of Georgia. At the same time, they can voluntarily choose other internationally recognized standards for their construction projects.

Recent reforms have simplified the introduction of new technologies in Georgia, while removing unnecessary barriers for foreign investors, and contributing significantly to the development of the construction industry.

Amcham and/or EUGBC Members

 Zimo Ltd.
Website: http://www.zimo.ge  
ZIMO Construction Company launched in 1997 and specializing mainly in the construction and rehabilitation of bridges, tunnels and motor-roads is credited with a great number of successful projects in this field. From the outset the Company recruited highly qualified staff (already over 300) and a wide range of up-to-date equipment. ZIMO Ltd is presently Georgia’s leading construction company focused, apart from road works, on the development of civil construction.  

 Georgian Industrial Group Holding
Website: http://www.gig.ge 
The Georgian Industrial Group is a holding company, which embraces and manages over forty companies, and is also involved in various fields, such as the energy generation and distribution, exploitation and refinement of natural resources, production of building materials, logistics, development, media business etc.