Construction Business 2016 by The FINANCIAL

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High Wages not Walls By RAFAEL CASTRO

The Most Expensive Districts for Residential Property

ISET eople who decide to leave their country and test their luck elsewhere are usually no random sample of a population. Continued on p. 10

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constructionbiz The FINANCIAL By MADONA GASANOVA

of primary real estate registrations stood at 9,416 units, while secondary - 37,291. The real estate sale market has shown signs of recovery amid Lari depreciation as of December 2015. The most expensive areas were still Old Tbilisi and Vake-Saburtalo, with average prices of USD 1,047 and USD 946 per m2 respectively. Isani-Samgori became the cheapest district for buying a residential property with an average of only USD 571 per m2.

According to the National Agency of Public Registry, transactions of real estate registry have grown by 11.6% in May 2016, in comparison with the same period of the previous year. The number totalled 46,707 units. May 2016 has shown predominant growth in comparison with the same month of the last three years. Continued on p. 15

The most attractive sectors in Georgia for investors are tourism and real estate, ICC President See on p. 16

Georgia to Sunk in Mortgage Gloom By DMITRY SUKIASOV, WEALTH TRADERS CLUB Read on p. 18

CURRENCIES 1 USD 1 EUR 100 RUB 1 TRY

June 25

June 11

2.2941 2.5377 3.5037 0.7800

2.1274 2.4033 3.3001 0.7294

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Lisi Development Launches New Phase with Radically Different Design The FINANCIAL By MADONA GASANOVA

he new phase of Lisi Development, worth more than USD 30 million, will be completed by 2017. Over 300-350 new residential apartments and townhouses will be added to the greenest district of Tbilisi. The limited number of apartments and lack of competition in its segment has allowed the company to avoid the currency shock without any impact. Eco-friendly environment and high standards of construction have become the main criteria for Georgians when choosing an apartment. “The new phase of the project will be designed by invited Georgian and Dutch architects. We plan to introduce a radically different architectural style toour customers. It will diversify the designs of the green city on Lisi. I will not reveal all of the details but will say that the new design will be conducted with different construction materials. Our previous apartments were mostly covered with brick and wood. The new phase will be designed with stained-glass windows. This will allow residents to enjoy a perfect view of the city and surroundings,” Nodar Adeishvili, Director General at Lisi Development, told The FINANCIAL. According to Adeishvili, overthe past two years the currency shock has deteriorated the overall economic conditions. However, devaluation did not have an impact onthe sales of Lisi Development. “The only issue is that we could have reached better parameters if it were not for thecurrency shock. Devaluation contributed to a price reduction on construction materials. So, the processes balanced each other out. Accordingly, we managed to avoid the devaluation withoutdamage.” Founded in 2011, Lisi Development is the first and only development company in Georgia to have rejected the traditional approach to site usage in favour of a more environmentally-friendly option. The sustainable concept of its project is called “80/20”, which entails 80% of the territory being a designated green and recreational zone. The company decided to “build the environment”

NODAR ADEISHVILI, Director General at Lisi Development

and meet the needs of the present without compromising on the ability of future generations to meet their own needs. The once-arid Lisi territory has been transformed into a green zone, where people recycle, cut down on carbon emissions and participate in sports competitions. In his interview with The FINANCIAL Adeishvili talked about the development of the company and its future plans. He underlined the main challenges of the Georgian construction sector. Q. You rarely find a business segment or company which has not been impacted by the currency shock. How did Lisi manage to maintain stability? A. We never offer a big share of product for sale. So our segment is always limited. Another benefit is that we are the exclusive providers of such a product. On its side, the demand is constantly increasing. All these factors contribute to the stability of our business. Q. Traditionally a big share of customers purchase apartments with mortgage loans. Such loans are always offered in a foreign currency. Have you witnessed a

drop in demand for mortgage loans among your existing or potential customers? A. Over 70% of our customers have been using mortgage loans for their final payment. Together with banking loans we offer internal credit. Since devaluation the share of customers using a mortgage loan has not changed. Q. Lisi Development was established in 2011. Which year would you distinguish as the most important? A. I would distinguish 2015. When in 2011 we were launching our project many people were sceptical and it was hard for them to imagine why one should live in this place. At that time awareness of Lisi as a prestigious residential district was less than zero. The company spent lots of energy on explaining to and assuring potential customers why they should accept this offer. Since our project became visible and tangible we no longer need to explain anything. Our existing residents are our ambassadors. Their positive feedback is the litmus for the success of our company. Q. In its relatively short history Lisi Development has won various international and local awards.

What is the main factor in your success? A. The company implemented a new standard on the Georgian market. The sustainable concept of our project called “80/20”, which entails 80% of the territory being a designated green and recreational zone, was really unique. We are the only company that decided to use 80% for green areas and additional infrastructure. Moreover, year by year we try to further develop our standards and add more innovations based on experience gained. The company stands on two values: to offer a product in line with the demands of our customers; and to improve the view of our city. Any of our new projects will be aimed at suiting the view of our city. Q. We frequently hear complaints regarding the low literacy and qualifications of employees in the construction sector. How does Lisi Development handle this challenge? A. We were lucky to gather staff members and partner companies from various fields that are high professionals and create our successful business. Some of our partners running construction are NCC and Anagi. The companies consist of high profes-

sionals. A separate company runs monitoring works, quality control, etc. All these companies are guarantors that the final product will be of a high standard as is expected by our customers. They also play a big role in the international recognition and awards that the company regularly receives. Q. What is the future of energy passive construction? A. A passive house is not only about heating and cooling abilities. First of all it includes low standards. We are clearly witnessing that the demands of consumers are changing. While choosing an apartment they pay attention to not only location and price, as they did previously; currently they want to know more about construction materials and their quality.Accordingly, the future of passive houses is really limited. It will be important for all construction companies to switch to European standards in terms of ecology and energy efficiency. First of all it will be dictated by market demand. Q. Would you saythat an ecologically clean environment is the main priority of customers while choosing a residential space?

A. Many companies try to use a green environment as their main advantage in their marketing chains as well as in the name of the company. It is good proof that the environment in which we have to live is becoming trendy. Another issue is how they fulfil this direction. Right now customers pay huge attention toan ecofriendly environment which is important for their well-being and health. This tendency will grow further in the future. Q. What kind of innovative technologies will be used by Lisi Development in its projects? A. We were one of the first that started the construction of energy efficient apartments. It allows our residents to reduce over 30% of expenditure on utility bills annually. Lisi Development has always been an innovation-oriented company. We have implemented various innovative technologies and plan to follow international standards in line with our projects. Right now we are discussing several offers in this direction which we will reveal after the selection process is finished. Q. Do you see the importance of implementing quality control of construction materials and residential buildings? A. I think it is necessary to monitor and control how, and with which materials, companies are constructing. Q. What are the main challenges of the construction business of Georgia? A. Companies should provide final products which will not damage the view of the city. It should always be a priority for city hall which is currently trying to solve this problem. They plan to ban and limit the height of buildings in various districts. The new general plan of the city should control this issue. Until the regulations are launched, the companies themselves should take care of it. We should not destroy the view of our city simply for the profit of our businesses. I believe that our mentality and attitude towards the city is changing step-by-step. I was glad to see a video recently where drivers in traffic were giving way to an ambulance in the streets of Tbilisi. It is a good example showing how we are trying to change traditional approaches to various issues.

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Real estate market must be a priority as exit vote causes widespread uncertainty Andy Pyle, UK head of real estate at KPMG, on the potential impact of the UK’s exit from the EU on the real estate market: “Until the dust starts to settle, the impact of the UK’s exit from the EU on the real estate market is difficult to determine and uncertainty will prevail.

“Whilst this uncertainty over timing and the UK’s future trading relationship with the EU remains, we expect the majority of UK companies will focus their attention on

assessing the impact on their business. We would expect their appetite to enter new property leases and increase their liabilities would diminish, leading to a general dip in occupier demand. It’s also reasonable to expect that, while there could be an impact across the UK as a whole, there will be significant variations in that impact across the regions and in different property asset classes. Given the potential for banks to need to transfer business undertaken in London into the Eurozone, we could see a particular decline in London’s dominant position as Europe’s leading financial and business centre, which would impact real estate demand in the City in particular.

Data Misuse Threatens One-Third of Company Revenues from Affected Consumers

“Similarly, we would expect investors will carefully assess the impact before making major decisions as to whether to buy or sell property. We have seen a significant slow-down in the volume of transactions in the run up to the referendum and it’s likely that will continue. This is consistent with what international investors told us when we surveyed them in March*, but the majority also told us they expected to continue to invest in the UK going forward, regardless of whether the UK left the EU. “Should sterling go into tailspin in the next few days, weeks and months, international investors playing the long game are more likely to jump on what could be a

once in a lifetime chance to get hold of ‘cheap’ property. While this won’t be limited to real estate, the enduring rule of law and objectivity of private property protection in the UK, will make investing at a low point in the market very attractive. Given the strength of the UK property market and its track record of bouncing back, it’s likely to be seen as a relatively safe bet, despite currency turmoil. “And of course, there is a consideration over how migration will be dealt with – our construction industry relies heavily on EU workers. Should rules change to limit those workers, we will see an even bigger skills deficit in the industry, with a knock on

effect on both the commercial and residential property markets. While that may be a longer term concern, given the time any changes to migration rules are likely to take, it’s a distinct possibility. “While the actual impact will take time to play out, what’s important is that the Government and the industry recognises that as terms are defined and agreed, it is vital to maintain the attractiveness of the UK as a place to invest in property. Outside of those involved directly in the market, the wider UK economy has significant exposure to the real estate market – just think about the property investments made by our pension funds.”

BGEO Takes Over Tbilisi Water Utility Firm

GEO Group, a holding company of Bank of Georgia, said it has agreed to buy remaining 75% in Georgian Global Utilities Limited, which owns water and wastewater service providers in Tbilisi, Rustavi and Mtskheta. BGEO, which already holds 25% shares in the Georgian Global Utilities, will pay USD 70 million for rest of the shareholding at the closing of the transaction within a month. BGEO said that the deal values the Georgian Global Utilities at GEL 287.5 million (roughly USD 129.27 million

as of June 23). Offshore registered Georgian Global Utilities Limited (GGU) supplies water and provides wastewater service in the capital city Tbilisi through its wholly owned company Georgian Water and Power. Georgian Global Utilities also provides similar services in Rustavi and Mtskheta, towns near Tbilisi, and also owns three hydropower generation facilities with a total capacity of 143MW. BGEO bought 25% shares of the Georgian Global Utilities for USD 26.25 million in December, 2014. BGEO is a UK incorporat-

ed holding company whose businesses include Bank of Georgia; Georgia Healthcare Group, which owns network of healthcare facilities under the Evex brand and medical insurance; and real estate developer m2. “The buy-out of the remaining 75% of GGU [Georgian Global Utilities ] fits into our strategy to acquire attractive businesses which can be monetized within a six year period, via an IPO” or a mergers and acquisitions trade, CEO of BGEO Group, Irakli Gilauri, said. Source: Civil Georgia

EU, Georgia Sign Security of Information Agreement

Half of Consumers Believe that Companies Are Not Being Honest About Their Use of Personal Data and Will Not Protect It, BCG Research Finds, and Only One in Five Consumers Trust Companies to “Do the Right Thing” The FINANCIAL – Recent consumer research from the BCG Henderson Institute has

uncovered a previously hidden obstacle to successfully unleashing the trillion-dollar opportunity of big data: data misuse. Consumers’ reactions to data misuse can lead them to reduce their spending by about one-third. Data misuse does not refer to a use of data disclosed in an agreement that no one reads when signing up for a credit card, mobile phone, or social media service; it is not even about whether a use actually causes harm to consumers. Data misuse occurs when consumers experience an unwelcome surprise in the collection and use of data about them. Consumers are increasingly reacting negatively to these surprises—even when the use is actually benign. “If companies take the right steps now to manage the risk of data misuse, they will not only head off the looming threat to their earnings performance but they will also gain a sustainable competitive advantage,” says John Rose, a senior partner and lead author of the article. Concerns about data misuse remain at high levels

across generations and countries. Consumers who said they are concerned about the sharing of personal data online increased slightly since 2013, rising from 83% to 86% in the US. Four out of five US millennials are similarly concerned. While differences exist between the US and the European countries surveyed, the potential revenue losses are comparable. Consumers are primed to view most new uses of data as data misuses. Nearly half the consumers surveyed believe that companies are not being honest about their use of data and will not protect it. Only about 20% of consumers across all the countries surveyed trust companies to “do the right thing” with data about them, and approximately 30% across all the countries surveyed believe that companies will not do the right thing. This is particularly troubling given that 71% to 79% of the surveyed consumers said they would be unlikely to share or let data about them be used by a company they did not trust.

eorgian Foreign Minister Mikheil Janelidze and EU’s foreign policy chief Federica Mogherini signed Security of Information Agreement between Georgia and the EU in Brussels on June 23. Upon entry into force, the agreement will enable the European Commission, EU’s diplomatic service – the European External Action Service, the Council of the EU to exchange classified information with relevant authorities in Georgia. The agreement, however, does not oblige either the EU or Georgia to exchange classified information, but ensures that any such information,

if exchanged, is given a level of protection commensurate with its security classification. The agreement is expected to enter into force by the end of 2016 after the completion of the ratification procedures by Georgia and the EU. The Georgian Foreign Ministry said that the agreement “will significantly contribute to deepening of Georgia’s cooperation with the EU in the security sector.” During the meeting Janelidze and Mogherini discussed broad range of priority areas of the EU-Georgia cooperation, including implementation of the Association Agreement, visa liberalisation, ongoing reforms in Georgia, as well as “situation

in the occupied regions” of Abkhazia and South Ossetia, according to the Georgian Foreign Ministry. “We know that you also have important elections coming up in October and we hope that our cooperation before and after that will be as excellent as it has been so far,” Mogherini said. She also reiterated that Georgia has done a “remarkable” work in meeting all the criteria required to be granted shortterm visa-free travel rules in the Schengen area. EU’s final decision on visa liberalization has been delayed after the lastminute objection from Germany earlier this month. Source: Civil Georgia

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Investment Portfolio of HeidelbergCement Georgia to Total USD 400 Million The FINANCIAL By MADONA GASANOVA

n 2015, HeidelbergCement Georgia had record sales of 1.63 million tons of cement and clinker, which was 19% more than the previous year’s result. The company plans to invest USD 100 million in a new cement production line in Kaspi using a dry process that will push down production costs substantially. Adding up the new investments will result in up to USD 400 million investments in Georgia in total. HeidelbergCement Georgia is the Georgian subsidiary of HeidelbergCement Group and the market leader for cement, employing more than 1,200 people in Georgia. The company’s income in Georgia represents 2% of the Group’s overall revenue. HeidelbergCement Group is one of the world’s largest integrated manufacturers of building materials with leading market positions in aggregates, cement, and ready-mixed concrete as well as other downstream activities. The company employs some 45,000 people at 2,400 locations in more than 40 countries. “2015 was a very successful year for all the business activities of HeidelbergCement. The company has improved its results considerably in comparison to the previous year,” Davit Jughashvili, Director of Building Materials at HeidelbergCement Georgia, told The FINANCIAL. The recent economic changes and devaluation of the national currency have influenced the construction market in Georgia, causing certain risks for market players. However, HeidelbergCement managed to overcome these difficulties, and has maintained stable growth, due to its customer-

DAVIT JUGHASHVILI, Director of Building Materials at HeidelbergCement Georgia

oriented approach on one side and offering high quality products and services on a stable basis, on the other. “In spite of its negative effects, the crisis had less severe influence on the Georgian economy compared to its neighbour countries,” said Jughashvili. In Jughashvili’s words, as a leading building products producer in Georgia, HeidelbergCement has a huge positive effect on the Georgian economy, due to the following reasons: HeidelbergCement has set the highest standards of quality in building materials production, and it is one of the largest investors and employers in Georgia. The company expects to reduce prices for its cement

products, while the price of concrete will remain stable in the future. In 2015 HeidelbergCement Georgia had record sales of 1.63 million tons of cement and clinker, which was 19% more than the previous year’s result, ensuring a 60% share on the Georgian cement market. Last year the company produced more than 650 thousand cubic meters of concrete, continuing to supply its products to the vast majority of large-scale projects in Georgia. As a result, the number of customers in a single year has significantly increased up to 1,200 companies in 2015, featuring major development companies, as well as contractors, private builders and investors.

One of the highlights of 2015 was completion of 19km of the Agara - Ruisi section of the E60 highway. HeidelbergBeton produced 120 thousand cubic meters of concrete for the project from 2 high capacity concrete batching plants. “Among other important projects we shall mention are: Millennium Hotel in Tbilisi - the 150m skyscraper; East Point - the biggest shopping mall in the Caucasus; APM Port Terminal in Poti; and commencement of BP’s South Caucasus Pipeline Expansion project that implies installation of 3 mobile concrete plants,” Jughashvili said. Important investment decisions were made in 2015. HeidelbergBeton purchased

concrete and aggregates related activities of two big companies. This further strengthened the company’s positions on the building products market in Tbilisi. HeidelbergCement continues its further expansion in the region and due to the growth of the cement market in Georgia, together with The Georgian Co-Investment Fund and Hunnewell Partners, plans to jointly invest USD 120 million to upgrade its existing cement and concrete facilities in Georgia. Final closing of the agreement is scheduled in June 2016. “USD 100 million will be spent on a new cement production line in Kaspi using a dry process that will push down production

costs substantially. Preparation works in Kaspi already started at the end of 2015. The main works will begin in July 2016,” Jughashvili said. In order to reach a strong vertically integrated business setup, an additional USD 20 million will be invested in upgrading and developing the network of ready-mixed concrete and aggregates plants. Throughout its presence in Georgia HeidelbergCement has overall invested USD 275 million in the Georgian cement and concrete markets. Adding up the new investments will result in up to USD 400 million investments in total. HeidelbergCement started business in Georgia in 2006. After ten years of continuous development of the business the Georgian subsidiary HC Caucasus currently operates three integrated cement plants (Kaspi and Rustavi), a cement grinding facility in Poti and a cement terminal on the Black Sea coast. The cement production capacity exceeds 2 million tons of high quality cement. The cement business is supported by a strong network of 12 ready-mixed concrete plants that produce more than 700 thousand cubic meters of concrete per year. HeidelbergCement Georgia meets European standards in all its fields of management and production activities. The company is working according to 3 pillars on sustainable development: Economy, Ecology and Social Responsibility. New filters installation; scientific project “Quarry Life Award”; charitable event “Tbilisi Marathon”; waste management - all of these are in response to HeidelbergCement’s mission and sustainable development guidelines.

2 concrete batching plants for rehabilitation of Ruisi-Agara section of E60 Highway

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Caparol: Georgia the Global Leader in Building Paint Usage The FINANCIAL By MADONAGASANOVA

espite economic difficulties in the region Caparol Georgia managed to end 2015 with 15% growth. The company opened a new plant for producing dry mortars. The new plant of Caparol in turn stimulated the establishment of a new sand producing company in Georgia. Georgians have been named one of the leaders inthe consumption of building paints. The company names lack of usage of local raw materials and qualified staff in the construction business as key challenges. “2015 has been an important year for us in several directions. Firstly, the company managed to reach over 15% growth on the South Caucasus market. This figure was quite successful against the background of the deteriorated economic conditions in Azerbaijan. Economic problems occurred also in Armenia. Overall, conditions were difficult in Russia and Turkey which had a negative impact on Georgia as well. In addition to our company’s growth, we luckily witnesseda boost in the construction business of Georgia,” Boris Gamrekeli, Director at Caparol Georgia, told The FINANCIAL. Caparol’s concern, DAW, issued an additional volume of investment for constructing a new plant for producing dry mortars in 2015. “Dry mortars are used for thermal insulation systems and decorative plasters. We are mainly using Georgian raw materials in our production. It is important that such an enterprise becomes a locomotive for other productions. For example, we required washed, dried and separated sand for this production. There was no producer of such a product on the Georgian market before. So, the demand of our company stimulated the establishment of a new enterprise, which is now our supplier. In total, Caparol Georgia became a stimulator of the establishment of three small enterprises working with domestic raw materials. We are glad to encourage the usage and utilization of local mineral resources. Before that the whole share of this product

BORIS GAMREKELI, Director at Caparol Georgia

was imported from Turkey. Now we have managed to partly replace import. Right now the share of local raw materials consists of over 25%. We do not consider the foundation of new enterprises in our business direction as competition. On the contrary - we appreciate it,” said Gamrekeli. Q. From the second month of 2016 the Georgian Lari has shown to be strengthening against the USD which is more or less returning stability to businesses. What is your assessment of our neighbouring countries, have they moved to the post-crisis stage, or arethey still experiencing crisis conditions? A.Since the recent crisis Azerbaijan started changing the main principles of its economic work. We are witnessing a change in the state’s approach towards the economy. They are changing the management style of customs houses, of the taxation system. All ofthese will definitely lead to positive changes. According to the positive feedbackthere is already stabilization occurring in Azerbaijan. We can say that the country is switching to the post-crisis level. From our company’s perspective I can say that we are waiting for more positive results this year. As for Armenia, the

country has been more stable in comparison with Azerbaijan. So, we expect it to reach better results in 2016 than we had in 2015. Q. Caparol Georgia was established in 2005. Which year would you distinguish as the most successful and why? A. The development of our company and its contribution to the whole country’s economy is one of the main measures of success for me. In this regard, I would distinguish 2008, when despite the tragic conditions that developed, Germans did not back-pedal and we managed to open our first factory in Tbilisi. It was the litmus of Germans’ trust in a better future of Georgia. Another successful year was 2015, when despite all geopolitical problems in the region, our concern allowed us to re-invest and we managed to open a new plant. Q. Caparol is positioned on the Georgian market with two brands - Caparol and Alpina. How are sales divided between these two brands? A. Caparol products are more for professional usage. It is comparatively expensive and its proper usage requires some knowledge and abilities and sometimes instruments. Under such conditions, it is natural that the share of Caparol in sales is dependent on consumer

well-being and solvency. From year to year sales of Caparol are increasing in Georgia. Whereas previously we were producing only Alpina in Georgia, last year we started the production of three sorts of Caparol paints. It means that step-by-step consumers are becoming more oriented towards professional construction materials. Sales of Alpina are still dominating but we are glad to witness growing demand for Caparol. Q. Which is the main segment of your customers - corporate or retail? A. In line with our strategy and activity, the company had experienced a time when we were largely dependent on huge-scale projects. We realised that it could bring about a negative result and started diversifying our consumer segment. In accordance, several years ago we shifted to the retail segment. Of course it was challenging for us as the market hadalways had its traditions with main players. Competing with them was difficult. However, we managed to gain leadership in Georgian building paint materials. During the last three years not only our company, but the whole direction,has been witnessing the activity of private small and medium sized construction businesses. Q. What is the share

of your company out of Caparol’s global sales portfolio? A. It is really interesting that the sales volume of paint materials in Georgia alone greatly exceeds the sales of Caparol in China. Caparol Georgia sells more paint per capita than Russia or Ukraine. It can be explained by our mentality. The top priorities of Georgians when receiving some income incorporate ‘supras’, a new car and apartment. Women are the main drivers of repair works. Moreover, statistically more colours of paint are purchased in Georgia than elsewhere in the world. Q. Caparol is a symbol of colours. Which are the most popular colours in Georgia? Caparol has hundreds of thousands of colours. In addition, with a special instrument we can create an individual colour of any configuration. We can create and fulfil a colour of any imagining and moreover, we offer the creation of a nominative colour. It is hard to name the most popular colour in Georgia as they regularly change in line with the fashion and trends. Q. What are your expectations for 2016? A. We are quite optimistic about 2016. Competition is rising and we have always welcomed it. The establishment of new enterprises contributes to our economy. We are

ready to accept this challenge. Q. Besides a wide range of colours, what stands behind the Caparol brand? A.Innovations are the key factor determining the success of Caparol for decades. Caparol was the first to introduce thermo insulation systems. It allows energy passive buildings to transform into energy effective ones. The slogan of the company is -I am Innovation. Inside the corporation we have an internal social network where employees share their innovative ideas. The platform generates new ideas, which are targeted to be a step ahead of existing demands and trends. Our concern, DAW, owns its research institute, RMI. It is widely used by our competitors as well. Our products are made of recycled materials, we use natural resources and this is just a small list of our innovative technologies. Q. Do you see the importance of quality control of construction materials in Georgia? A. I find it crucial. Any construction should be in line with some standard, whether European or U.S. or Chinese, in accordance with the builder’s stipulation. However, consumers should be aware of it. Stating one concrete standard and forcing everyone to follow it does not seem right to me. Another important issue is literacy in professional fields. You can purchase a material of high quality but if it is improperly used it can become lowgrade. Unfortunately, Georgia stopped educating residents in the construction field. As a result we have workers of low or half qualification. In this regard our company has published the book - Profession Painter - and distributed it free of charge. It was translated from the German education module. We also arrange seminars for builders and engineers. Q. What are the main challenges for your company? A. Getting more domestically-produced raw materials is one of the main challenges. Step-by-step we are managing to reduce the share of import but I wish to speed up this process. Another issue is finding qualified staff in this field.We manage to handle other different challenges which can be solved with the capacity of our company. The abovementioned two issues are really beyond our controlthough and require the involvement of other institutions.

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King David Towers Breaking Traditional Approach to Business and Residential Space The FINANCIAL By MADONA GASANOVA

ing David, incorporating residential space and a business centre in two towers, will open to the public in December 2016. With USD 70 million the company is introducing a new class-A residential and business centre that meets international standards. Offering all services in one place was the main goal of King David. Just two months after starting sale of its property, the company has already sold over 25% of its residential space. As the second highest building in Tbilisi, King David is a multifunctional complex consisting of two towers. The higher tower, named King David Residence, is a residential space. The shorter tower, King David Business Centre, incorporates class-A office space. The last three storeys of the Business Centre will be hotel rooms. These will mostly accommodate guests of the office space. It will not be a hotel operator. Over 40% of the project is made up by infrastructure. A spa centre; fitness centre; swimming pool; beauty centre; wine cellar; restaurant; and Garden on terrace will all be located within the complex. A recreation zone spread over 1,400 square metres will be located on the terrace. A space for children as well as a healthfood cafe will be dotted with evergreen shrubbery. Residents will also be able to enjoy a children’s development centre. King David is a project where the time of its residents and workers is valued greatly. In this regard, the company created a project where people can get everything they need in one space - the ability to live, work, entertain themselves, and enjoy rest. King David is the first condominium-type complex in Tbilisi. The investment portfolio of the complex is USD 70 million. It will open for use in December of the current year. As for the construction process, the company is currently completing repair works of the façade as well as inside the buildings. The complex is nearing completion. King David is a rare example of a development company that started sale only after almost completing its project. Just two months since starting the sale of residential apartments, over 25% have already been purchased. “Fortunately, during the peak of the devaluation our complex was not available to the public for sale. The beginning of our sale coincided with the relative stability of the exchange rate. In addition, despite the persisting difficult environment, interest towards our project started from November-December, when we had created just the very first stage of activity and created our Facebook page in order to respond to any questions. It is hard to say with certainty whether sales would have been successful if they had started at that time. Regardless, it seems that the devaluation did not have a huge impact on the high-end segment,” Nini Mariamidze, Head of the Marketing Department at King David, told The FINANCIAL. In her exclusive interview

NINI MARIAMIDZE, Head of the Marketing Department at King David

with The FINANCIAL, Mariamidze discussed the outstanding advantages of the King David complex, which has allowed the company to maintain a high volume of sales despite the recent currency shock. With over ten years of experience in the real estate market, Mariamidze provided her outlook on the sector and its main challenges. Q. The Georgian real estate market continues the practice of selling properties that are still under construction - socalled “air”. It was quite remarkable to find that King David decided to start selling only after the completion of building works. What was behind this decision? A. King David is targeted at the high-end segment. In this case it is important to show your customers what they will be purchasing. Every nuance should be concretely shown in order to highlight its advantages. The second issue is that fortunately, the company had the option to not just sell air. We could afford to complete the construction processes and only after then offer property for sale. Having such an opportunity is always a big advantage for any company. Q. What is the general attitude of Georgians towards purchasing “air” at the moment? A. Since 2008 people have not only been averse to purchasing air, but most often have also avoided buying apartments that were not yet in operation. Fortunately, this trend has changed recently. People are again prepared to buy air. I cannot say how secure this is. However, from the example of our project, I can say that ever since the first two storeys were constructed, we started witnessing big interest in the project. It means that if we had offered it up for sale, people would have purchased. The lesson to be learnt by companies from 2008’s post-war crisis was

that starting construction was sensible only in cases where it was possible to complete it. The risks that existed before 2008 have been taken into account by the development companies. Accordingly, the attitude of consumers towards this issue is now more relaxed. Q. As you have mentioned, interest from potential customers was quite high during the construction process. What is the sales statistic for now? A. Demand is higher for the King David Residence. Actually we have not yet offered space in the business centre for sale. We are currently completing the concept of the business centre. As soon as it was stated that the small tower would be a business centre, many international organizations, including companies that have been established on the Georgian market for quite a long time, expressed willingness to move to the business centre. Tbilisi is actually lacking class-A business centres. Many of them do not meet the demands of international and Georgian organizations. Accordingly, during the last month we have been witnessing big activity from this segment. However, we have not yet offered it up for sale. In just the first two months of selling residential apartments, over 25% have already been purchased. Our sales are distributed over a four year period as it is for the very high-end segment. We do not expect to sell the whole complex by the time construction is completed. We are quite satisfied with the results of the first two months of sales. Unfortunately, the construction business is expecting quite a difficult year ahead due to the upcoming elections. This market is always fairly sensitive towards elections. Interest as well as purchasing can almost interrupt that time. Accordingly, it is hard to foresee how the market will develop further.

Meanwhile, I expect that the sector will still be active in December. The approximate projected share of our sales is 40% by the end of the year. Q. What are the prices at King David? A. Our prices vary from USD 1,700 to USD 3,500. Market research of the Georgian real estate market confirms that USD 1, 700 is not a high price. Each of these costs has its own segment. Available space starts from 54 square meters. It is one of the most popular sizes of residential space on the Tbilisi market. So, we are quite flexible in terms of prices as well as space. Q. Please can you tell us what the specific advantages of King David are? A. I will not go into great detail on the perfect view that can be enjoyed from our complex. Many foreigners, tourists and Georgian emigrants that have had a glance from the top floor of our complex claim that the view from King David is much better than that from even the Funicular as the whole silhouette of Tbilisi, including Mtatsminda, can be seen from here. The height of the King David Residence is 115 meters. The whole city can be seen from our complex. We are proud to state that no other complex has such a beautiful view of Tbilisi. However, our infrastructure still remains one of our leading advantages. I, personally, regret to see that in Tbilisi separate projects are dominating over complexes. People purchase not only an apartment but an environment for living in. The concept of our complex incorporates the whole environment where people can live, enjoy and entertain themselves. Combining everything in one space is really important. Construction security; quality of building materials; unbroken water and electricity supply - all these mean that our residents will never experience power cuts or wa-

ter shortages as generators will automatically take over in such circumstances, not only in the elevators but in each apartment, which have been taken to the highest level. The whole complex is equipped with a building management system (BMS), which is a computer-based control system installed in buildings that controls and monitors the building’s mechanical and electrical equipment such as ventilation, lighting, power systems, fire systems, and security systems. The façade has been monitored in Germany, at the Schuko technical base, and can weather a 9 magnitude earthquake. So, we have lots of advantages, whether in terms of security, the environment or the view. Q. King David is a 115 meter building resting on top of rock. How secure is it? A. I have personally frequently heard that the building is not secure and could be risky. We can prove the security with proper documents. However, what I can prove verbally is that before starting construction geophysical and geological analysis was carried out. As a result it was stated that the rock is very solid, as hard as Metekhi, which has existed since the 13th century. The groundwork is made from reinforced concrete, almost two meters in height. So, we can confidently claim that the groundwork is one of the most solid that has been constructed in Georgia. Local and international organizations were carrying out studies at each stage of the construction. So, we can provide proper documentation to any interested person and confirm that the security really is at a very high level, in line with international standards. Q. What is the main challenge facing the Georgian construction sector? A. Regrettably, price still remains one of the main criteria when choosing an apartment. Consumers rarely go beyond

the price. It really is a big challenge for our project. It seems that the Tbilisi market is not ready for such projects. There are individuals who appreciate the advantages we offer. These are mostly those from the segment which have lived abroad or have some international connections and therefore appreciate these advantages. Q. Which segment of Georgian real estate is in deficit and which in surplus? A. The low and middle segments are in real surplus. However, none of them are facing problems of realization. Flexible mortgage loans have made it affordable for people with stable incomes to purchase apartments. Even 25-30 square meter apartments are being offered for sale. Companies directly offer an apartment as an investment package. So, there is quite a surplus of residential space for the lower-end segment. However, such property still manages to find buyers. The problem with realization exists with the high-end segment of residential space. We can find some already-completed projects which are still up for sale. There is quite a deficit of office space. The majority of business centres in Tbilisi do not meet international standards. At the very start of construction, the Business Centre was originally projected to also be a residential apartment block. However, the lack of office space encouraged us to change it. Q. Do you see the importance of implementing quality control of construction materials and caring about the skyline of the city during construction? A. I think it is necessary as currently it is up to individual companies’ goodwill. Most often companies are using the brand names of popular companies in order to attract customers and that is all. On their side, customers are not very aware of detailed information regarding quality in order to proclaim their demands of the companies. We have published such detailed information in our book. So, customers interested in detail can get all the information they want. Contrary to Georgians, foreign customers have many more questions regarding security. I am glad that our project provides responses to all of their questions. I cannot say whether all the companies manage to meet these standards. However, most frequently customers do not pay attention to it. I don’t appreciate that. That’s why it is important to regulate security measures by law. Otherwise it could actually lead to a very negative outcome where no one will be forced to take responsibility. As for the view of the city, unfortunately we do not have a general plan of the development of the city. King David Residence is 31 storeys. The location was chosen properly. It does not impair the view of the city. The project is located between the old and new parts of the city. Moreover, when you look from King Tamar Bridge, our project blocks the unsightly view that had been created around the territory of the Sport Palace.

CMYK

HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 27 JUNE, 2016

construction business

Advertiser: King David. Contact FINANCIAL Ad Dep at marketing@finchannel.com

CMYK

HEADLINE NEWS & ANALYSIS 27 JUNE, 2016 | FINCHANNEL.COM

construction business CURRENT PRICES ON GASOLINE AND DIESEL

Prices in GEL G-Force Premium 1.75 G-Force Euro Regular 1.61 Euro Regular 1.52 G-Force Euro Diesel 1.69 Euro Diesel 1.48 CNG 1.18

Prices in GEL

Prices in GEL Eko Super Eko Premium Eko Regular Eko Diesel Euro Diesel Euro Regular Diesel Energy

1.95 1.80 1.75 1.70 1.58 1.60 1.50

Eurosuper Premium Avangard EuroPremium Euroregular Eurodeasel

27 JUNE, 2016, GEORGIA

Prices in GEL 1.75 1.65 0.00 1.45 1.45

Super Nano Premium Euro Regular Nano Regular Nano Diesel Euro Diesel

Prices in GEL 1.90 1.75 1.55 1.60 1.42 1.60

Euro Super Efix Euro Premium Euro Regular 93 Efix Euro Diesel Euro Diesel

1.99 1.77 1.55 1.72 1.52

GASOLINE PRICES PRESENTED BY

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THE PRICE OF KHACHAPURI FOR OUR NEIGHBORS (ИЛИ ПОЧЕМ ХАЧАПУРИ ДЛЯ СОСЕДЕЙ)

n May 2016, the average cost of cooking one standard Imeretian khachapuri declined to 3.08 GEL, which is 2.7% lower compared to April 2016, but 7% higher compared to May 2015. Come the summer season, tourism provides a major boost to the demand for Georgian products (and their prices). With the addition of international flights to Tbilisi, Kutaisi and Batumi, Georgia is currently attracting many more visitors from further away destinations, such as Iran and Israel. Still, the largest numbers of international arrivals originate in countries with which we have a land border: Russia, Turkey, Azerbaijan and Armenia. During 2014 and 2015, Georgia and all its neighbors went through a process of currency devaluation relative to the US dollar. Yet, the extent of devaluation was sharper for the oil producing countries in the bunch. The result was a change in relative prices, with the non-oil countries becoming relatively more expensive for Russian and Azerbaijani consumers and tourists. We show this change in relative prices by translating ISET’s Khachapuri Index into the na-

tional currencies of our neighbor countries (Ruble, Manat, Lira and Dram), with January 2014 serving as the basis. As can be seen, the usual fluctuations of the Khachapuri Index during this period are greatly amplified by the wild movements in the exchange rate

between GEL and other national currencies. As of May 2016, Georgia managed to improve by 10-20% its competitive advantage (not only in khachapuri!) with respect to Turkey and Armenia, but became some 30% more expen-

sive for tourists from Russia and Azerbaijan. For now, however, higher prices failed to deter foreigners from coming to Georgia. And, judging by the skyrocketing Khachapuri Index dynamics in Batumi, most of them don’t carry sandwiches in their bags.

High Wages not Walls By RAFAEL CASTRO

ISET

eople who decide to leave their country and test their luck elsewhere are usually no random sample of a population. In his 1987 paper “Self-Selection and the Earnings of Immigrants” (American Economic Review 77, pp. 531-553), Harvard Political Scientist George J. Borjas discusses the so-called self-selection of migrants. As of 1987, the standard view among migration economists was that migrants, at least those who came to the United States, belonged to the “upper tails” of the income distributions in their home countries. As income reflects economic performance, they were considered to be of “high quality”, as Borjas writes. This assertion was backed by empirical findings. For example, new arrivals to the United States started with lower wages than natives, yet subsequently their incomes increased steeper in each year than those of native workers. About 15 years after immigration, when the initial disadvantage of being a newcomer had disappeared, the average immigrant received a higher salary than a native of equal observable characteristics. “The ‘best’ persons leave the country of origin and when they get to the United States, they outperform the native population” and

Syrian refugees on flimsy boats landing in Greece. If immigration was regulated by minimum wages, people would not lose their lives crossing borders. Source: Wikimedia Commons/Ggia

generate a “brain drain into the United States”, as Borjas paraphrased the predominant view of the time. The story was probably always a different one in Europe, which attracted immigrants not only thanks to its economic opportunities but also through generous welfare subsidies. In terms of those who come to

Europe today, e.g. in the recent immigration waves, there is evidence that they are anything but economic high-performers. To the contrary, many of these immigrants seem to be particularly ill-suited to serve the needs of advanced economies. With regards to Syrian refugees, Ludger Woessmann, head of the ifo Center for the Econo-

mics of Education in Munich, estimates that two thirds of the refugees “are severely limited in their reading and writing skills and can solve only the most simple mathematical problems” (Die Zeit, December 3rd, 2015). Continued on p. 14

CMYK

HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 27 JUNE, 2016

construction business

Development Company m Real Estate to Launch Two New Projects in 2016 2

The FINANCIAL By MADONAGASANOVA

fter successfully completing its fifth residential complex at Tamarashvili 6, development company m2 plans to launch two new projects this year. The first premium line project -‘Skyline Residence’ - is already under construction. Having a diversified segment was the main contributor to the company’s positive sales dynamic despite the dramatic devaluation. Established in 2006, m2 currently has five completed and four ongoing projects. Last week the company opened its fifth complex atTamarashvili 6. ‘Optima Isani’ the first project of the Optima line will also be completed very soon, in July 2016. ‘m2 at Hippodrome 2’ - a 819-apartment complex, will be completed in October 2018. It should be noted that 30% of this project (247 apartments) has already been sold. The company has just started construction of ‘m2 on Kazbegi 2’, which is located at Kazbegi Avenue 15. Its construction will be completed in 2018. Sales of this project are about to start. A three-star hotel under the brand name ‘Ramada Encore’ will also be built as part of this project. The hotel will be designed to hold 152 rooms. In addition, the first premium line project of m2 - Skyline Residence - is already under construction. It is located in Sololaki and will incorporate 19 exclusive apartments, a health club and open swimming pool overlooking old Tbilisi. Construction of the energy efficient complex m2 at Tamarashvili was completed three months ahead of schedule. The company is now beginning the process of handling over fully-renovated apartments to their future residents. m2 on Tamarashvili is a 270-apartment complex, consisting of two 19-storey blocks. The project is distinguished by a green environment - perennial plants and a specially created square alongside the buildings. For more comfort and security the complex will have its own security, cleaning and landscaping services. Also, for additional safety reasons, the complex is equipped with a fire alarm system in accordance with international standards, including fire detectors on each floor and fireresistant doors in the hallways. “In 2016 we plan to launch two new projects in the most prestigious places - Chavchavadze Avenue and Melikishvili Street. In addition, several residential complexes are in the design phase,” Irakli Burdiladze, Deputy CEO at m2, told The FINANCIAL. “The rapid change of the exchange rate slowed down the process of purchase to a certain extent at the first stage. However, this factor did not cause dramatic changes in our sales. Our company has a wide choice of apartments to offer in terms of price and location. In accordance, our potential customers can choose an apartment in line with their solvency capacity. It should also be noted that the rate of instability changes consumer behaviour. It increases the decisionmaking process, because at such times people become more careful about decision making. The recent exchange rate stability showed that the market has returned to previous dynamics,” Burdiladze said. Q. Traditionally,a big share of customers purchase apartments with mortgage loans. Such loans are always offered in a foreign currency. Have you witnessed a drop in demand for mortgage loans among your existing or po-

IRAKLI BURDILADZE, Deputy CEO at m2

tential customers since the devaluation? A. We believe that this process has not forced potential clients to reject a new apartment purchase. They still have a need for it. It is significant that increased competition among banks contributed to a reduction of interest rates on mortgage loans. m2 has signed an agreement with several commercial banks. Accordingly, our customers can take out mortgage loans from Bank of Georgia, Bank Republic and TBC Bank with competitive rates. This enables more customers to buy an apartment with the support of their desired bank and desired conditions. In addition, this year we offered new flexible payment terms, called‘10/90’ to our customers. It allows them to pay only 10% of the total cost till the end of the

construction process, while the remaining 90% can be covered up to 6 months after completion. Q. m2 was established in 2006. Which year would you distinguish as the most successful for your company and why? A. Our company is developing and growing from year to year more and more. In our view, the success of the development company is determined by its alreadystarted, within a defined period or earlier-completed, and successful, projects. For example, ‘m2 at Tamarashvili’ has been completed two and a half months earlier than planned. We believe that 2016 is better than 2015, but worse than 2017 will be. It’s a joke. In fact 2015 was also successful. We started the most large-scale project ‘m2 at Hippodrome 2’ and also offered the

first project of our premium lineSkyline Residence. Q. With its new line - Optima - introduced in 2014, m2 started creating projects for the middle and low-end segment. How are the sales of your company divided between the medium and highend segment? A. This project has very good references. m2 was the first to start offering fully renovated, energy-efficient apartments at an affordable price - USD 29,000. It was unprecedented, a sensational price for that time. Over 70% of Optima Line apartments are already sold. This is quite a good result. As mentionedabove, this project has been successfully constructed and fully-renovated apartments will soon be delivered to their owners.

Q. What kind of innovative technologies are used by m2? A. m2 was one of the first to start building with energy-efficient materials and we established this trend. We are pleased that other companies have followed us in this venture. Residents of our Nutsubidze, Kazbegi, and Tamarashvili streets save up to 23% on utility bills due to the energy efficient components. The company started using a modern façade and fire protection systems. It should be noted that m2 continues the search for innovation and each new project is upgraded from the previous one in this way. Q. The Georgian real estate market is still lacking international standard office space. Is m2 planning to enter this segment? A. The company has already started work in this regard. Office as well as commercial space will be offered in our new complex on Kazbegi Avenue. By the way, there will also be a kindergarten in this complex. Q. Please can you describe to us what residents of m2 are like? A. Our customers are people who appreciate quality, security and surrounding environment. Potential residents of our houses pay huge attention to the quality of construction, materials and repairing works. They value security and deadlines of completion, which we always meet. Ecology and clean environment have become crucial nowadays. Accordingly, m2 complexes are surrounded by a green environment.In this regard, m2, and its residents are in harmonic convergence. Q. How has the establishment of m2 influenced the Georgian real estate market? A. m2 has significantly contributed to the development of the Georgian real estate market. We supported the return of customers’ confidence towards the development sector that was damaged bythe 2008 crisis. m2 is introducing new standards in construction, which is very important for the development of this sector.

CMYK

HEADLINE NEWS & ANALYSIS 27 JUNE, 2016 | FINCHANNEL.COM

construction business

markets

Weekly Market Watch ECONOMY

alloys (+59.7% y/y), nuts (+52.6% y/y), pharmaceuticals (+19.9% y/y), and gold (+29.0% y/y) posted increases. Petroleum (-11.3% y/y), cars (+2.3% y/y), pharmaceuticals (+1.3% y/y, excluding one-offs), gases (-38.8% y/y), and telephones (+55.9% y/y) represented the top 5 imported commodities in May 2016. In 5M16, the trade deficit is down 7.8% y/y to US$ 1.87bn, excluding one-offs, as imports fell 9.0% y/y to US$ 2.64bn and exports fell 11.7% y/y to US$ 780.4mn.

Trade deficit down 7.8% y/y excluding oneoffs in 5M16 In May 2016, exports decreased 11.6% y/y to US$ 172.3mn, imports were up 8.1% y/y to US$ 608.6mn (excluding oneoffs), and the trade deficit was up 18.5% y/y to US$ 436.3mn, according to GeoStat. Reduced copper ore exports (-30.7% y/y) and car re-exports (-5.7% y/y) were the major commodities weighing on export growth in May 2016, while ferro-

5M16 GDP (% change) GDP per capita (ppp) GDP per capita (US$)

Georgia sovereign credit ratings

Real GDP growth, %

Key macro indicators 2015

International ranking of Georgia, 2016

2014

2.8%*

2.8%

4.6%

…

9,566

9,209 3,676

…

3,743

Population (mn)

3.7**

4.5

Inflation (eop)

2.1%

4.9%

2.0%

Gross reserves (US$ bn)

2.6

2.5

2.7

CAD (% of GDP)

….

11.8%

10.6%

Fiscal deficit (% of GDP)

….

3.8%

3.0%

Total public debt (% of GDP)

…

41.5%

35.5%

Source: Of¿cial data, IMF, G&T *As of 4M16 **Preliminary results of census, previous data is subject to recalculation

Ease of Doing Business # 24 (regional leader)

Source: GeoStat Note: 1Q16 ¿gure based on rapid estimates

BB-

Ba3

BB-

Stable Affirmed May-2015

Positive Affirmed Mar-2015

Stable Affirmed Apr-2016

Global Competitiveness Index # 66 (improving trend) Source: World Bank, Heritage Foundaition and World Economic Forum

BGEO group PLC announces that JSC BGEO Investments, a wholly owned subsidiary of BGEO, has signed a

PLC announces the purchase of the remaining 75% stake in GGU

Economic Freedom Index # 23 (mostly free)

Source: Rating agencies

Nominal Effective Exchange Rate and Real Effective Exchange Rate

BGEO Group

Exports by commodities, 5M16

WEEKLY MARKET WATCH EXCLUSIVELY PROVIDED TO THE FINANCIAL BY GALT & TAGGART

Imports by commodities, 5M16

Share Purchase Agreement, to acquire a 75% equity stake in Georgian Global Utilities Limited (GGU) on 23 June, 2016. As a result of this buyout, the Group will own 100% of GGU. The transaction values GGU’s enterprise value at GEL 287.5mn.

EBRD issued its first public bond on the Georgian Stock Exchange Source: NBG Note: Index growth means appreciation of exchange rate, decline means depreciation of exchange rate.

Source: GeoStat

FIXED INCOME Corporate Eurobonds: Bank of Georgia Eurobonds (GEBGG) closed at 4.0% yield, trading at 103.7 (-0.1% w/w). GOGC Eurobonds (GEOROG) were trading at 101.8 (-0.3% w/w), yielding 4.7%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 110.6 (+0.1% w/w), yielding 5.7%. Georgian Sovereign Eurobonds (GEORG) closed at 109.9 (-0.5% w/w) at 4.5% yield to maturity.

Amount, US$ mn Issue date Maturity date Coupon, % Fitch/S&P/ Moody's Mid price, US$ Mid yield, % Z-spread, bps

GWP 11/17

M2RE 03/17

Source: Bloomberg Source: Bloomberg

Eurobonds EVEX 05/17

TBC Bank (TBCB LI)

Georgia Healthcare Group (GHG LN)

BGEO Group PLC (BGEO LN)

Local bonds Nikora 03/18

EQUITIES

Georgia Eurobonds, YTM (%)

The European Bank for Reconstruction and

Development (EBRD) issued its first public bond on the Georgian Stock Exchange in the amount of GEL 107mn on 17 June, 2016. The five-year issuance has a floating rate coupon linked to the three-month Certificate of Deposit (CD) issued by the National Bank of Georgia, with the initial three-month coupon set at 6.45%, following the NBG’s CD auction. This is the EBRD’s third successful bond issuance in Georgian lari managed by JSC Galt & Taggart.

GLC GEOROG GEOROG GEBGG 09/17 04/21 05/17 07/17

03/16

12/15

03/15

05/15

09/14

250

Apr-2016 May-2012

03/18

12/17

03/17

05/17

09/17

Apr-2021 May-2017

11.000

15.000**

9.500

8.750

6.750%

6.875%

-/-/-

BB-/-/-

-/-/-

BB-/-/-

BB-/B+/-

100.0

100.0*

101.6

101.87 100.65

103.5

11.0

15.0

7.75

8.25

n/a

GEORG 04/21

GRAIL 07/22

500

400

Jul-2012 Apr-2011Jul-2012 Jul-2017 Apr-2021Jul-2022 7.750% BB-/BB/Ba3

6.875% BB-/BB/Ba3

7.750% BB/BB-/-

101.8

103.7

109.9

110.6

5.9

4.7

4.0

4.5

5.7

484.7

389.5

337.1

343.4

457.0

BGEO Group (BGEO LN) shares closed at GBP 24.50/share (-2.08% w/w and -2.00% m/m). More than 453k shares traded in the range of GBP 23.11 – 26.79/share. Average daily traded volume was 85k in the last 4 weeks, more than in the previ-

MONEY MARKET Re¿nancing loans: National Bank of Georgia (NBG) issued 7-day re¿nancing loans of GEL 250mn (US$ 112.4mn).

Source: Bloomberg

ous month. FTSE 250 Index, of which BOGH is a constituent, declined 2.00% w/w and lost 6.08% m/m, respectively. The volume of BOGH shares traded was at 1.15% of its capitalization. TBC Bank (TBCB LI) closed the week at US$ 12.60 (-3.08% w/w and +5.00% m/m). More than 32k GDRs changed hands in the range of US$ 12.60 – 13.50/GDR. Average daily traded volume was 53k in the last

4 weeks, less than in the previous month. Georgia Healthcare Group (GHG LN) shares closed at GBP 2.75/ share (-3.34% w/w and +11.66% m/m). More than 149k shares were traded in the range of GBP 2.70 – 2.95/share. Average daily traded volume was 80k in the last 4 weeks. The volume of GHG shares traded was at 0.05% of its capitalization.

Certi¿cates of deposit: NBG sold 91-day, GEL 20mn (US$ 9.4mn) certificates of deposit, with an average yield of 6.45% (down 105bps from previous issue). Ministry of Finance Treasury Notes: 5-year GEL 10.0mn (US$

4.7mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on June 15, 2016. The weighted average yield was ¿xed at 9.392%. The nearest treasury securities auction is scheduled for June 29, 2016, where GEL 25mn nominal value 1-year T-Bills will be sold.

T-bills / T-notes, yield curve

Monetary policy rate

Source: Bloomberg *GWP 11/17 bonds are in Georgian lari **Floating rate with 7.5% over the NBG’s re¿nancing rate

Eastern European sovereign 10-year bond performance Issuer

Amount, US$ mn

Georgia Azerbaijan Bulgaria Croatia Hungary Romania Russia Turkey

500 1,250 323 1,250 3,000 2,250 3,500 2,000

Source: Bloomberg

Coupon, % 6.875% 4.750% 5.000% 3.875% 6.375% 6.750% 5.000% 5.625%

Maturity date 12/04/2021 18/03/2024 19/07/2021 30/05/2022 29/03/2021 07/02/2022 29/04/2020 30/03/2021

Ratings (Fitch/S&P/Moody) BB-/BB-/Ba3 BB+/-/Ba1 /BBB/-/BB/BB/Ba2 BB+/BB+/Ba1 BBB-/BBB-/Baa3 BBB-/BB+/Ba1 BBB-/NR/Baa3

Mid yield, % 4.5 4.7 1.1 3.4 3.3 3.2 3.1 3.7

Source: NBG *As of latest auction

Source: NBG

WEEKLY MARKET WATCH EXCLUSIVELY PROVIDED TO THE FINANCIAL BY GALT & TAGGART Investments (or any short-term transactions) in emerging markets involve signi¿cant risk and volatility and may not be suitable for everyone. The readers of this document must make their own investment decisions as they believe appropriate based on their speci¿c objectives and ¿nancial situation. When doing so, such recipients should be sure to make their own assessment of the risks inherent in emerging market investments, including potential political and economic instability, other political risks including without limitation changes to laws and tariffs, and nationalization of assets, and currency exchange risk.

GALT & TAGGART Address: 79 D. Agmashenebeli Avenue, Tbilisi 0102, Georgia Tel: + (995) 32 2401 111 Email: gt@gt.ge

CMYK

HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 27 JUNE, 2016

construction business

Business Award 2016

TBC Bank and Geocell Present Business Award Press Release TBC Bank presents the largest in Georgia business award. The aim of the award is to support the development of Georgian small and medium enterprises. The general partner of the project is Geocell. On one hand, the business award aims to encourage successful entrepreneurs and motivate them to achieve even more success; on the other hand, we aim to inspire them to use all the diverse opportunities that exist in the country, share their success and develop their businesses. Companies that operate in Georgia, that were registered before year 2016 and the annual turnover of which does not exceed GEL 10 milllion, are eligible to participate in the business award. Winners will be revealed in the following nominations: The touristic enterprise of the year The agribusiness of the year Georgian product of the year Innovative enterprise of the year Marketing campaign of the year Small enterprise of the year Enterprise of the year Any business the customers of which are local and foreign tourists and which have gained their recognition can be selected in the nomination of the Touristic Enterprise of the Year. The evaluation of the nominees is based on the public reviews made by the customers, rankings given by international ranking companies, articles and coverage in local and foreign media or social networks, the popularity of the company

webpage, awards gained in different competitions and etc. Any business the activity of which covers production, distribution or processing of agricultural products can participate in the nomination Agribusiness of the Year. It is important that the major value of the product is created in Georgia. The priority will be given to such companies that produce their products in compliance to the relevant industry’s international standards. Companies can submit any product that was created, introduced or developed in Georgia in the nomination of the Georgian Product of the Year. The product implies tangible (food prod-

ucts, toys, textile, etc.) as well as intangible products (video, webpage, movie and etc.). The evaluation of the products will consider whether the product is exported and whether it is the first time such product was taken for export. The jury will also consider if the export of the product was one time or regular, what activities has the companies performed in order to establish itself on the new market, how much did it increase its share of the target market and what export potential does it possess. The nomination Innovative Enterprise of the Year accepts applications from companies that have created, introduced or developed such technological in-

novation or invention which has commercial potential or social importance. Technological innovation can be a product, service or a process. It is possible that the technological innovation is not unique on worldwide scale; however, it should be innovative for Georgia or for the area where it was created, launched or developed. Any business from any field which has implemented such marketing campaign that brought special popularity among the customers to business/brand/product and significantly increased number of customers and sales can participate in the nomination of Marketing Campaign of the Year.

The enterprise from any field that has the annual turnover below Gel 1.5 million, has achieved success in business and gained the minds of the customers despite the small size can participate in the nomination Small Enterprise of the Year. The company will also reveal winners in the nomination of Enterprise of the Year. The jury will base their evaluations on such criteria as special achievements of the enterprise and interesting stories reflecting these achievements, enterprises headed by young people, potential for international development. The winner of the nomination will become TBC Business Ambassador for one year and will participate in various activities. The winner of Marketing Campaign of the Year will be revealed electronically, with general voting. In all the other nominations the winners will be revealed by the jury consisting of the experts from various fields of the economy. The winner in the nomination Enterprise of the Year will be selected from the total applications submitted for all nominations. The winners in the rest of the nominations will be revealed from three finalists per each nomination. The porfolios of the finalists will be publicly revealed through conventional and social media. The applications for the competition can be submitted from June 21 through August 15. The award ceremony will be held in November. The applications should be submitted online at: www.Businessaward.ge.

Production in construction Homes with White Kitchens Sell for $1,400 down by 0.2% in euro area Less than Homes with Yellow Kitchens The FINANCIAL -- In April 2016 compared with March 2016, seasonally adjusted production in the construction sector fell by 0.2% in the euro area (EA19) and increased by 0.4% in the EU28, according to first estimates from Eurostat, the statistical office of the European Union. In March 2016, production in construction fell by 1.0% in the euro area and by 1.5% in the EU28. In April 2016 compared with April 2015, production in construction fell by 0.4% in the euro area and by 1.5% in the EU28.

Monthly comparison by construction sector and by Member State The FINANCIAL -- A home’s paint colors can have a notable impact on its final sale price. According to a new analysis from Zillow Digs, forsale listings with rooms painted in sage green or wheat yellow can sell for as much as $1,300 more than expected. Zillow Digs analyzed photos from nearly 50,000 sold homes to see how certain room type and paint color combinations impacted their sale price. Of all the colors analyzed, homes with yellow kitchens, often in hues of creamy or wheat yellow, yielded the

highest sale premium ($1,360 above expected values). Wall colors painted in other earthy tones like sage green or dove gray were also present in topperforming listings. While everyone’s style choices are different, there are some paint colors that could actually deter buyers. For example, homes with dark or style-specific wall colors, like slate gray or terracotta sold for as much as $1,100 less than expected. Lack of paint color could also have a negative impact on a home’s sale price as those with white or eggshell-colored kitchens

also sold below expectations. “A fresh coat of paint is an easy and affordable way to improve a home’s appearance before listing,” says Svenja Gudell, Zillow chief economist. “However, to get the biggest bang for your buck, stick with colors that have mass appeal so you attract as many potential buyers to your listing as possible. Warm neutrals like yellow or light gray are stylish and clean, signaling that the home is well cared for, or that previous owners had an eye for design that may translate to other areas within the house.”

The decrease of 0.2% in production in construction in the euro area in April 2016, compared with March 2016, is due to building construction falling by 0.4%, while civil engineering grew by 0.9%. In the EU28, the increase of 0.4% is due to civil engineering rising by 1.1% and building construction by 0.3%. Among Member States for which data are available, the largest decreases in production in construction were recorded in the Czech Republic (-3.3%), Spain (-2.4%) and Bulgaria (-2.1%), and the

highest increases in Romania (+5.8%), Slovenia (+5.4%) and the United Kingdom (+3.0%).

Annual comparison by construction sector and by Member State The decrease of 0.4% in production in construction in the euro area in April 2016, compared with April 2015, is

due to building construction falling by 0.7%, while civil engineering grew by 1.3%. In the EU28, the decrease of 1.5% is due to civil engineering falling by 5.2% and building construction by 0.8%. Among Member States for which data are available, the largest decreases in production in construction were recorded in Slovenia (-31.2%), Hungary (-29.8%), Poland (-15.9%) and the Czech Republic (-15.2%), and the highest increases in Romania (+12.8%), Sweden (+8.7%) and the Netherlands (+6.2%).

CMYK

HEADLINE NEWS & ANALYSIS 27 JUNE, 2016 | FINCHANNEL.COM

FactCheck

Central European construction market growth will speed up in 2017

THE FORMER PRIME MINISTER OF GEORGIA

Bidzina Ivanishvil:

The total number of employees in the private sector increased by 55,000 persons in 20132015 whilst this number decreased by 23,000 between 2006-2012” lie The FINANCIAL Fact CHEK

n 30 May 2016, the former Prime Minister of Georgia and founder of the Georgian Dream party, Bidzina Ivanishvili, addressed the population with a letter which gives a comparison of the situation under the rule of the previous and incumbent governments. Mr Ivanishvili believes that the new Government of Georgia has improved the situation in absolutely every aspect listed in his letter. For example, He says: “The total number of employees in the private sector increased by 55,000 persons in 2013-2015 whilst this number decreased by 23,000 between 2006-2012.”

FactCheck verified the accuracy of Bidzina Ivanishvili’s statements in the letter. As illustrated by Table 1 below, the number of employees in the private sector over the last three years increased by 54,660 persons. The growth in the number of employees in the private sector reached 63,394 between 2006-2013. The total number of employed persons decreased by 23,000 between 2006-2012 and includes both private and public sectors. The decrease in the total number of employed persons was caused by a drop in the number of persons employed in the public sector and so portraying this number as a private sector employment indicator misleads the reader. In his letter, Bidzina Ivanishvili uses the method of

comparing the total indicators (for instance, in the cases of investments, construction and tourism) for 2013-2015 to the total indicators for 2010-2012. However, he does not use this method when it comes to employment (this method is the best one for analysing employment indicators) and compares the 20132015 data to those of the previous six years (although he does it incorrectly). If we compare the growth of employment in the private sector in 2010-2012 and 20132015, we will see that 92,600 jobs were created in 20102012 whilst this number was 54,600 (38,000 less) in 2013-2015. The average pace of employment growth in the non-state sector was 2.25% in 2010-2012 and 1.24% in 2013-2015.

Table 1: Employment in Terms of Institutional Sectors (thousand men)

Total State Sector Non-state Sector

2006 1,747 360 1,387

2007 1,704 327 1,377

2008 1,602 275 1,327

2009 1,656 298 1,358

2010 1,628 286 1,342

2011 1,664 266 1,398

2012 1,724 274 1,450

2013 1,712 247 1,465

2014 1,745 251 1,494

2015 1,780 275 1,505

Source: National Statistics Office of Georgia

CONCLUSION THIS MEANS THAT MORE JOBS WERE CREATED IN A FASTER MANNER IN 2010-2012 THAN IN 2013-2015. HOWEVER, THE LETTER IS AN ATTEMPT TO PROVE THE OPPOSITE. FACTCHECK CONCLUDES THAT BIDZINA IVANISHVILI’S STATEMENT IS LIE.

LIE

resh funding from the EU, during a new funding period, is expected to be the key driver behind the Central European construction growth from 2017 onwards. According to PMR, global market intelligence company, the mortgage market continues to offer low interest rates, and house prices are attractive for a larger number of consumers. This prompted developers to launch a number of residential developments in 2015.

Poland Despite the fact that civil engineering construction had a weak start to the year, PMR expect that 2016, as a whole, will see a continued rise in output, mostly on the back of an upturn in road construction and power construction. In non-residential segment, given strong data on building permits, the sector should grow by 3-4% in 2016 and 2017. A growing interest on the part of international investors who still perceive Polish real properties as an excellent investment is great news for the commercial construction industry. When it comes to residential construction, despite the thriving segments of real property development and individual construction, Poland’s housing policies still place the country near the bottom of the European league. According to the report, these circumstances mean that there is still a considerable potential for the development of residential construction in Poland.

Czech Republic

The views expressed in this website are those of FactCheck.ge and do not reflect the views of The FINANCIAL or the supporting organisations

The new EU funding programme is expected to give the Czech road construction a fresh impetus. However, state funding for road construction for 2016 fell, and this jeop-

ardised a number of planned road construction projects. Moreover, in 2016 the budget for railway infrastructure construction will be substantially reduced, because of the general budget cuts prompted by the need to reduce the state budget deficit. When it comes to non-residential construction, the year 2015 brought the first marked recovery, as the floor area of building permits increased by almost one-third. The increase is expected by developers to be fuelled mostly by industrial and warehouse construction, as a number of fresh investments and commitments from strong developers were announced in 2015. Overall, Czech construction output is, therefore, expected to grow at a slow pace in the next five years and to exceed the CZK 500bn (€18.5bn) threshold only after 2020.

Slovakia After six years of decline, the year 2015 brought 20% recovery for the Slovak construction industry. The growth was driven mainly by civil engineering construction, and transport infrastructure construction in particular. However, after substantial growth in 2015, the Slovak engineering market will undergo a double-figure reduction in 2016, mostly because of the shift between the old and the new EU budgets and the very high comparative base. Private investment will partly offset this deterioration and become the key fuel for gross fixed capital formation, to a great extent via foreign direct investment, such as the Jaguar Land Rover plant in Nitra, on which construction is scheduled to commence in 2016. In total, Slovakia is expected to receive almost €4bn for transport infrastructure investments for the period 2014-2020, in comparison with €3.2bn for the previous period, of which some €1.7bn is to be spent on road construction projects. The EU allocated funding will allow the construction of around

130 km of motorways and expressways. Moreover, industrial and logistics construction is expected to give non-residential construction a strong boost in the coming years. The former Slovak government and its successor have expressed willingness to support investments in this area in their attempt to entice companies to launch operations in Slovakia.

Hungary After a weaker 2016 (a transitory stage between the old and the new EU budget) civil engineering construction on the Hungarian market will continue to grow from 2017 onwards. However, the rate of growth is expected to slow significantly in comparison with 2013-2014. Despite all of these signs of recovery, Hungary is threatened by an unstable political situation and numerous controversies associated with the way in which the government spends public funds on infrastructure projects. Moreover, the on-going ban on the construction of large shopping malls is limiting investments in this area. As a result, no major retail facility projects were unveiled in 2014-2015. Most of the output in the retail construction arena is accounted for by small developments in small towns.

Romania The absorption rate for EU 2007-2013 funds has improved from 15% at the end of 2012 to 66% in 2016. The encouraging trend is expected to accelerate in the 2014-2020 programming period, mostly because of diminishing corruption and the more investment-focused programmes of Romanian politicians. In the 2014-2020 programming period, Romania is due to have access to €5.1bn of EU funds for the development of its transport infrastructure, of which about €3.2bn is to Continued from p. 19

CMYK

HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 27 JUNE, 2016

FactCheck

Long-term initial maturities largely prevail among EU Member States Debt mainly held by nonresidents in around half of Member States The FINANCIAL

ith slightly more than a quarter (27%) of total government debt having a term below one year, Sweden registered in 2015 the highest proportion of shortterm initial maturities of debt among the Member States for which data are available. Hungary (15%), Italy and Portugal (both 14%) as well as France (11%) also recorded shares of shortterm maturity debt above 10%. At the opposite end of the scale, almost all debt was made up of long-term maturities in Estonia, Poland, Bulgaria and Slovakia.

mainly financed by debt securities in most Member States In 2015, debt securities

were the main financial instrument in almost all EU Member States. This was particularly the case in Malta (92% of total government debt), the Czech Republic (90%), the United Kingdom (89%), Hungary, Slovenia and Slovakia (all 85%), France and Italy (both 84%). In contrast loans largely prevailed only in Estonia, Greece and Cyprus, where they accounted for 89%, 78% and 69% respectively. The use of loans was also high in Luxembourg (42%), Portugal (39%) and Croatia (37%). The use of currency and deposits was in general very low, except in Ireland (10%), the United Kingdom (9%), Italy and Portugal (both 8%).

General More than government threequarters of gross debt

debt held by nonresidents in Lithuania, Slovenia and Finland Significant differences can be observed across the EU regarding the sector in which government debt is held. Among Member States for which data are available, the share of public debt held by non-residents in 2015 was highest in Cyprus, Lithuania, Slovenia and Finland (all with 76% of total government debt), followed by Austria (73%) and Latvia (72%). In contrast, the largest proportion of debt held by the resident financial corporations sector was recorded in Denmark (63%), ahead of Luxembourg and Malta (both 62%), Italy (60%), Croatia and the United Kingdom (both 59%). Generally across the EU, less than 10% of debt was held by the resident non- financial sectors, with the noticeable exceptions of Malta (29%), Hungary (14%) and Ireland (10%).

Euro area job vacancy rate up to 1.7% The FINANCIAL – The job vacancy rate in the euro area (EA19) was 1.7% in the first quarter of 2016, up from 1.6% in both the previous quarter and the first quarter of 2015, according to figures published by Eurostat, the statistical office of the European Union. The job vacancy rate in the EU28 was 1.8% in the first quarter of 2016, up from 1.7% in both the previous quarter and the first quarter of 2015. In the euro area, the job vacancy rate in the first quarter of 2016 was 1.4% in industry and construction, and 2.0% in services. In the EU28, the

rate was 1.4% in industry and construction, and 2.1% in services.

Member States Among the Member States for which comparable data are available, the highest job vacancy rates in the first quarter of 2016 were recorded in Belgium (2.6%), the Czech Republic, Germany and Sweden (all 2.5%), and the lowest in Greece (0.2% in the fourth quarter of 2015), Spain and

Portugal (both 0.7%) and Poland (0.8%). Compared with a year ago, the job vacancy rate in the first quarter of 2016 rose in twenty two Member States, remained stable in three and fell in three. The largest increases were registered in Malta (+1.2 percentage points), Latvia (+1.0 pp) and the Czech Republic (+0.8 pp). The only decreases were recorded in Greece (-0.6 pp between the fourth quarter of 2014 and the fourth quarter of 2015), Ireland and Cyprus (both -0.1 pp).

MEMBER OF THE UNITED NATIONAL MOVEMENT

Giorgi Kvirikashvili:

“The level of corruptionrue t in Georgia is veryLlow.” F HA Valeri KVARATSKHELIA

Fact CHEK

he Prime Minister of Georgia, Giorgi Kvirikashvili, on air on Sky News, stated: “According to the World Justice Project, in terms of low levels of corruption, Georgia is in the first place among the 13 countries of Eastern Europe and Central Asia, whilst out of 102 countries worldwide, Georgia ranks 29th. In regard to the Global Corruption Barometer survey, less than 4% surveyed in Georgia said that they have ever given a bribe. This is a very low level of corruption.” FactCheck took interest in the accuracy of the statement. The World Justice Project was founded upon the initiative of the American Bar Association and works to advance the rule of law throughout the world. One of the outputs of the World Justice Project is the Rule of Law Index which reflects the perception of the rule of law by the citizens of a given country. The research is based upon the survey results of more than 100,000 households and 2,400 experts. The average assessment of a specific territorial unit depends upon 48 indicators from eight categories. These categories include: Constraints on Government Powers, Absence of Corruption, Open Government, Fundamental Rights, Order and Security, Regulatory Enforcement, Civil Justice

and Criminal Justice. The indicators for the Rule of Law Index in Georgia in the period of 2012-2015 are given in Table 1. As illustrated by the table, the average assessment number for Georgia in 2012-2013 was 0.63 which corresponds to the 6th and 30th places in the regional and full rankings, respectively. In 2014, the average number worsened and dropped to 0.6. As a result, Georgia moved down by one place in the full ranking but moved up to the 1st place in the Eastern Europe and Central Asia regional rankingfollowing a regrouping change (Estonia, Hungary, Poland, the Czech Republic and Slovenia, which performed better than Georgia, were removed from the Eastern Europe and Central Asia region). In 2015, Georgia’s average number rose to 0.65. Therefore, Georgia moved up to the 29th place in the full ranking and maintained the same position in the regional ranking. According to the data of the World Justice Project, Georgia’s Absence of Corruption indicator was 0.77 in 20122013. It worsened and fell to 0.71 in 2014 but increased to 0.73 in 2015 although not reaching the margin registered in 2012-2013. At the same time, according to Transparency International’s Corruption Perception Index, Georgia’s indicator was 52 in 2012. It worsened in 2013 and decreased to 49, reached the same number in 2014 as it had in 2012 and then did

not change again in 2015. Therefore, Georgia’s corruption perception level has not changed in a positive direction in the last three years. The results of the Global Corruption Barometer’s latest research were published in July 2013. According to this research, only 4% of the surveyed population said that they had paid a bribe during the last 12 months which is a very low indicator indeed. The worldwide average is 27% (see the link). However, of particular note is that the research published in 2013 reflects the situation as it was in 2012. The data for the present situation are given in Transparency International Georgia’s research published at the beginning of May 2016. There were 2,032 participants in the survey conducted by the Caucasus Research Resource Centreon the direction of Transparency International Georgia. Of this number, 40% is of the opinion that it is usual for public servants to abuse their powers for personal gains. This number constitutes a 15% and 28% rise as compared to the numbers in 2015 and 2013, respectively. The situation is different when it comes to corruption levels at lower levels of the hierarchy. Only 1% of those surveyed in 2016 says that he had paid a bribe in the 12-month period prior to the survey. This number is the same as the one registered in 2015 but less than the number registered in 2013.

Table 1: Rule of Law Index (Georgia) Year Constraints on Government Powers Absence of Corruption Order and Security Fundamental Rights Open Government Regulatory Enforcement Civil Justice Criminal Justice Average Number Place in the Region1 Place in the Whole Ranking

2012-2013 0.48 0.77 0.84 0.61 0.47 0.63 0.61 0.66 0.63 6 30

2014 0.53 0.71 0.48 0.58 0.85 0.57 0.59 0.51 0.60 1 31

2015 0.62 0.73 0.61 0.64 0.83 0.62 0.63 0.54 0.65 1 29

Source: World Justice Project 1 In 2012-2013, the region included 21 countries. From 2014, this number dropped to 13.

CONCLUSION FACTCHECK CONCLUDES THAT GIORGI KVIRIKASHVILI’S STATEMENT IS HALF TRUE.

HALF TRUE

The views expressed in this website are those of FactCheck.ge and do not reflect the views of The FINANCIAL or the supporting organisations Source- GB TGI Clickstream, Q3 2015

CMYK

HEADLINE NEWS & ANALYSIS

construction business

27 JUNE, 2016 | FINCHANNEL.COM

The most attractive sectors in Georgia for investors are tourism and real estate, ICC President The FINANCIAL -- Fady Asly, Chairman of the International Chamber of Commerce (ICC) Georgia, believes the optimism and confidence of Georgian business leaders is growing following the new approach of Georgia’s recently-appointed Prime Minister, who is actively reforming the business climate and improving the investment environment in Georgia. Meanwhile, the number one impediment to doing business in the country is the Revenue Service, claims Asly. In his words Georgia’s reputation is still bad and is not improving. As of today, the most attractive sectors in Georgia for investors are tourism and real estate. Asly believes these two sectors will remain the most attractive ones for some time. Q. World Bank group has recently praised the Government’s four-point reform agenda. What is your impression of it? A. For the first time in almost four years the Government came up with a clearly articulated agenda and we can only support the initiative. Georgia was run for years by tactical moves with no strategy and this nebulous approach has backfired very negatively on the image of the country and gave a perception that the Government didn’t know what they were doing and where they were going. Q. The four-point reform plan, which includes new tax benefits, infrastructure plans, governance reforms and an overhaul of the education system, was the Georgian Prime Minister’s plan to increase economic development. Could you please discuss each direction and tell us their advantages or disadvantages? A. Regarding the tax benefits and mainly the abolishment of profit tax for re-invested profits (Estonian Model), we believe that it is a good initiative that needs some fine tuning though. The Estonian Model is like a final polish to make the business climate more attractive but it will remain totally insufficient to improve the business climate if the current practices of the Revenue Service are not solved once and for all. Development of infrastructure is crucial for Georgia and this government has not done much for the past three years. It is absolutely vital at this stage to develop Public Private Partnership (PPP) and to modernise in the shortest period the legislation pertaining to PPP. Circumstances are incredibly good to develop PPP for infrastructure

FADY ASLY, Chairman of the International Chamber of Commerce (ICC) Georgia

projects for the following reasons: prices of commodities are at their lowest; price of oil is very low; interest rates of international financial places are extremely low; and cost of labour in Georgia is very low. Government reform is crucial but by the same token I believe that the Government needs to be very light with few ministries; it is very important to decrease bureaucracy to a minimum level. The Prime Minister is well aware of the shortfalls of the education system in Georgia that needs to be on a par with European standards, and therefore an overhaul of the system will help build a new generation that will integrate easily in the Western family. Q. A recent report showed confidence within Georgia’s business society had grown in the first few months of 2016. They called it the “Kvirikashvili effect”. Do you agree with this idea and if so, why? A. The Business Confidence Index is a report that is prepared jointly by the International School of Economics (ISET) and by ICC, and yes it has shown a sensible increase in the confidence of businesses in the future

and this is due to the appointment of Giorgi Kvirikashvili as Prime Minister. The Prime Minister enjoys a high level of confidence within the business community. As a matter of fact during the very difficult past three years and in his capacity as Minister of Economic Development, Giorgi Kvirikashvili listened attentively to our reservations regarding several negative legislations that were adopted by the Government and helped reverse those legislations in a way not to impact the business and investment climate. As a matter of fact, Giorgi Kvirikashvili was the only official in the Government to understand business and to realise the negative impact of all the counter-productive legislation that was passed by his colleagues. He was the only minister who listened attentively to the issues brought to him and who took concrete steps to solve those issues; based on that he enjoys very high credibility and confidence within the business community; as a matter of fact he is the one giving credibility to this government. Q. Kvirikashvili has big plans for economic growth - six per-

cent growth in 2017 despite the oil, currency crisis. Do you agree with this forecast? Will the Government achieve such economic growth next year? A. It is very difficult to predict a six percent growth for 2017, let us remember that the outcome of the October 2016 legislative elections can be very unpredictable. If Giorgi Kvirikashvili remains Prime Minister after October 2016 and if he surrounds himself with ministers of his own level of competence and vision, and provided he will have free hands to run the country, then a six percent economic growth will be very feasible. However, if we get the same incompetent officials that we have today back in power, I will be very surprised if we reach even two percent economic growth. As for 2016, my own assumptions are that the economic growth will be below three percent. Q. The Government is strengthening dialogue with business, sharing all new ideas and plans with them. How would you assess this process - is the Government deepening ties with business? Is the cooperation between them at a sat-

isfying level? A. Since the appointment of the new Prime Minister we are having much better and more open relations with the Government. Prime Minister Kvirikashvili has set the pace and given clear instructions to his government to listen carefully to the private sector. We feel a complete change in attitude, as a matter of fact I am sure that The FINANCIAL has noticed the same as well; for the first time since 2012 the Golden Brand Awards ceremony was attended by government officials at the rank of ministers and deputy ministers. This is a clear sign of the new direction that the Government has taken under the leadership of the Prime Minister. Several of our members have been struggling a lot with the Revenue Service since 2013; some of them were even driven to bankruptcy! After we brought the issue to Prime Minister Kvirikashvili he personally supervised the process and the problems of several of our members have been finally resolved and we are promised that the remaining struggling members will see their problems resolved as well. I would underline the great work that has been done by the Business Ombudsman and Advisor to the PM, Giorgi Gakharia, who has been following personally every single issue and reverting to us on a regular basis. For the first time in almost four years we feel optimistic. Q. What is the number one impediment to doing business in the country currently? A. Hands down the number one impediment to doing business in Georgia is the Revenue Service (RS); The RS and the other financial controlling bodies have systematically undermined the image of Georgia as a good place for business since the mid ‘90s. There are not enough adjectives in the English language to describe how bad the Revenue Service and the Financial Police are! They are the number one enemy of the country and have totally destroyed the reputation of Georgia. They act like thugs and racketeers, and belong to a breed of repressive bodies inherited from the Soviet Union. Georgia will never become an attractive place for investors as long as the structure of the Revenue Service remains as it is currently. No matter how many candies and lures the Government adds to the legislation, investors will still avoid Georgia till the gangster methods of the Revenue Service are stopped.

High Wages not Walls Continued from p. 10

In Europe, self-selection has turned into the negative, with underperformers being more likely to immigrate than those who do well. The point I want to develop in this article is that there is a possibility to restore positive self-selection using labor laws. If applied smartly, these may provide an effective and inexpensive solution to regulate the massive flow of immigrants to the developed world.

Selective Minimum Wages There is no need for citizens and immigrants to be bound by the same minimum wage laws. It would be better to couple an open-

door immigration policy to the stipulation that the minimum hourly wage for immigrants exceeds the average hourly salary in host economies (which is, for example, around $25 in America). An open-door immigration policy coupled with a higher minimum wage for immigrants would limit demand for immigrant workers while getting government bureaucrats out of the messy business of deciding who would be allowed to cross the border. In principle, everyone could come, provided a job which pays the immigrant minimum wage is started up within a certain amount of time. Aside from performing background security checks, immigration authorities would not have to be involved anymore in deciding who is able to work where. Any immigrant whose skills and education earn above average salaries will pay above average taxes and thus rai-

se the relative welfare of the host society. Any immigrant who does not earn this amount depresses average income indicators and undercuts vulnerable native workers. Moreover, a selectively higher minimum wage policy would deal elegantly with the millions of illegal immigrants currently residing in the United States and Europe. It would enable all those who are worth a higher minimum wage to remain legally, while those who are too unskilled to earn above average salaries would be unable to secure jobs and would repatriate. For practical matters, it would be necessary for illegal immigrants to be entitled to sue wage arrears from employers paying salaries below this higher minimum wage and that non-payment of this wage entails draconian fines. This would ensure that any employer thinks thrice before hiring immigrants

for salaries lower than their legal minimum wage.

Political Implications There is another advantage to the adoption of selective minimum wage laws. These laws will steer debates on immigration from emotionally-charged demagoguery into rational territory. The difference between conservatives and liberals would no longer revolve around those who want to expel and those who want to absorb millions of unskilled immigrants, but on the best peg at which to set the higher minimum wage for immigrants. Were this to happen, we might see a grand political realignment around the issue of immigration. Conservatives, supported by business-owners eager to hire foreign workers, might push for

immigrant minimum wages to be kept low, while liberals could support higher minimum-wages that shield their college-educated constituencies from the job competition created by skilled immigrants. The establishment of selective minimum-wages may be a recipe to manage immigration flows in the 21st century. In the long run, the relocation choices of immigrants must mirror the needs of host societies, and higher minimum wages for immigrants achieve this goal by bringing back the positive self-selection that has been diluted in recent decades. Rafael Castro is a political commentator residing in Germany. He is a frequent contributor to Ynetnews, Israel’s premier news portal. He received his bachelor’s degree from Yale University and his master’s degree from the Hebrew University of Jerusalem (in economics and political science respectively).

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Old Tbilisi and Vake-Saburtalo Lead the Most Expensive Districts for Residential Property The FINANCIAL By MADONA GASANOVA

ith 46,707 units the number of transactions on real estate registration has shown 11.6% growth in comparison with the same period of the prior year. Growth has been shown on primary as well as secondary transactions. The number of primary real estate registrations stood at 9,416 units, while secondary - 37,291. The real estate sale market has shown signs of recovery amid Lari depreciation as of December 2015. The most expensive areas were still Old Tbilisi and Vake-Saburtalo, with average prices of USD 1,047 and USD 946 per m2 respectively. Isani-Samgori became the cheapest district for buying a residential property with an average of only USD 571 per m2. According to the National Agency of Public Registry, transactions of real estate registry have grown by 11.6% in May 2016, in comparison with the same period of the previous year. The number totalled 46,707 units. May 2016 has shown predominant growth in comparison with the same month of the last three years. In May 2012 the number reached 46,856 units, a slight increase by 0.3% in comparison with the current yearâ&#x20AC;&#x2122;s data. In May 2013, the number of transactions was 38,497, or 21.3% less than in May 2016. In May 2014 the number of registrations was 40,836, or 14.4% less. As of May 2015, the number of registration units was 41,867, or 11.6% less than in May of the current year. The number of transactions as of May 2016, on primary registration transactions was 9,416, up from 7,850, or 19.9% more than in May 2015. As for secondary registration transactions, the number this year reached 37,291 units, up from 34,017, or 9.6% more than May 2015.

While YOY comparison has shown growth, the contrast of May 2016 with April 2016 was quite negative, showing a reduction by 16.4%. The drop has been expressed on both primary - by 29.4%, and secondary - by 12.3%, transactions. With 16,132 units, Georgiaâ&#x20AC;&#x2122;s capital Tbilisi was the top destination for real estate registrations as of May 2016. It was followed by Batumi 3,289 units; Kutaisi - 1,626; Gardabani - 1,315; Gori - 1,309; Mtskheta - 1,220; Rustavi - 1,181; Ozurgeti - 952; Gurjaani - 920; and Zugdidi - 856. According to the Real Estate Price Index of ISET Policy Institute, the real estate sale market has shown signs of recovery amid Lari depreciation as of December 2015.

As the analyses shows, average sale price on residential real estate started to increase in dollar terms during the last three month of 2015. Fisher index on rental prices of residential property fell drastically, decreasing annually by more than 18% terms in October 2015. Chughureti has been the most expensive district for buying and renting commercial property in Tbilisi. The average residential rental price first fell to USD 7.46 per m2 (a historical minimum since the start of the study by ISET-PI) in October 2015, and after a slight peak in the following month reached USD 7.66 per m2 by the end of the year. The average sale price revealed an increasing pattern during the last three months of 2015, and in Decem-

ber 2015 it amounted to almost USD 900 per m2. Although the average price of residential property did not decrease much over three months, there was a substantial decline in the Fisher index of rental prices reaching its minimum of 0.83 with the largest annual drop of 18.8% in October 2015. This means that rental prices of a typical (average) residential property have declined considerably, but this decrease was compensated by the increase in supply of better quality rental property located in more expensive districts which kept the average prices high. Throughout the different areas of Tbilisi, the average sale price increased in every district with the exception of Didube-Chughureti

and Gldani-Nadzaladevi. The most expensive areas in December were still Old Tbilisi and Vake-Saburtalo, with average prices of USD 1,047 and USD 946 per m2 respectively. Isani-Samgori became the cheapest district for buying a residential property with an average of only USD 571 per m2, closely followed by GldaniNadzaladevi which averaged at USD 583 per m2. The situation was somewhat similar on the residential rental market; Old Tbilisi and Vake-Saburtalo were the most expensive areas with average rents of USD 8.7 and USD 7.7 per m2 respectively. The cheapest district for renting flats is still Gldani-Nadzaladevi at USD 5.0 per m2. On the commercial property market, the average sales price has declined significantly after its peak in July and went down to USD 1.14 per m2 in December 2015. The residential property market suffered a huge drop in rental prices in the last month of 2015, falling to a minimum of USD 10.37 per m2. According to the analyses, the most expensive areas for buying residential property for the last three months of 2015 were Mtatsminda and Vake, with averages of USD 1,056 and USD 1,020 per m2 respectively. The cheapest districts were revealed to be Samgori and Gldani (USD 564 and USD 569 per m2). The most expensive and the cheapest districts in which to rent a property were Krtsanisi and Gldani, with average rental prices of USD 10.6 and USD 0.5 per m2. As for the commercial real estate market, according to the researchers, it has shown few differences. Chughureti was the most expensive area for both renting and buying commercial real estate (with average sale and rental prices of USD 282 and USD 7.3 per m2 respectively). Gldani was again the cheapest district, with the lowest average sale and rental prices in Tbilisi (USD 31 and USD 0.3 per m2).

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Georgia to Sunk in Mortgage Gloom By DMITRY SUKIASOV, WEALTH TRADERS CLUB for THE FINANCIAL

ortgage loan is one of the most common types of financial security securing the turnover of the real estate market. According to the representatives of development companies, over 70% of customers purchase apartments with mortgage loans. The devaluating Georgian Lari seriously jeopardizes the pay-off of mortgage loans as USD is dominating on the Georgian real estate market. The dominance of USD on this sector has a serious impact on the economy of Georgia. If there’s anything we’ve learned from the subprime meltdown of 2008 and crash of 1987, it’s that we should all proceed with caution when borrowing money to purchase or refinance a home. The dramatic fall of the Georgian Lari against the USD has already caused serious problems for our population. Mostly for those who have credit obligations in USD and income in the national currency. Stability

of the Georgian Lari and its strengthening during recent months radically changed the picture last week when the Lari still started devaluating and dropped from 2.1272 as of 10 June, to 2.2941 per USD 1 as of 27 June.

The investment options reputation The real estate market is of real estate recognized as one of the most Therefore, investing in as the most stable. real estate is rather justified. When it comes to investing in solid of all

this type of property, the first thing that is worth considering is our debt obligation on the part of good and bad credit. We all need to understand that when people are massively buying homes with a mortgage thinking that they are investing in real estate, they are actually handing over a promissory note for normal liability. Let’s consider the purchase of an apartment worth USD 60,000 with a mortgage contract of USD 40,000. Taking into account the entire commission, final repayment of the debt will amount to approximately USD 81,000. On the condition that the house will be under your ownership for ever, of course, it is beneficial in terms of expanding your own portfolio. In the case of renting, a living area of the same space would cost one a lot more than the whole sum that we pay to commercial banks, which amounts to over USD 36,000. When it comes to buying real estate for investment purposes, I would consider the purchase of living space as a last option. I would rather consider buying commercial space which can pay off credit obligations and with the right

investment, pay rent for a residential apartment.

The risk of mortgage loans grows greater

According to the official data of NBG, the overdue loan portfolio is growing not only on foreign currency loans, but also on national ones. During the first five months of 2016, the volume of overdue loans increased by GEL 83 million. From January to May 2016, the share of overdue loans at commercial banks increased by 21.5%, amounting to GEL 355.2 million. While the volume of overdue loans was GEL 292,124,000 for January 2016, for the end of May of the current year the figure consisted of GEL 355,254,000. Taking into account the condition of the market and the high potential of the new devaluation, long-term commitments in the form of mortgage loans are carrying a very large risk. The losses in currency exchange as well as paying off a loan become quite risky as the cost of credit greatly varies in the national currency.

European Real-estate Trends 2016, PwC

apital flows and city rankings will always attract the headlines, but this year Emerging Trends Europe shines a spotlight on fundamental changes at the business end of the real estate industry. It reveals an industry trying to come to terms with the needs of occupiers and the disruptive forces of technology, demographics, social change and rapid urbanisation. These ground-level disruptions are permeating through the entire real estate value chain. Investors are focused on cities and assets rather than countries. They also favour alternative, more operational assets for accessing outperformance, with 41 percent of respondents against 28 percent last year considering taking the plunge into alternatives. Healthcare, hotels, student accommodation and data centres are all expected to shine as sectors benefiting from urbanisation and longterm demographic trends. Development is seen as another way to achieve outperformance in 2016, with 78 percent agreeing it is an attractive way to acquire prime assets. The more progressive developers and investors are innovating – attempting to anticipate and adapt to rapidly changing occupier demands. Low interest rates and the sheer weight of capital bearing down on European real estate mean that most remain bullish about the industry’s business prospects in 2016. However, concerns over geopolitical issues like immigration and terrorism, Britain’s potential exit from the European Union, economic decline in China and uncertainty over Europe’s economic recovery, have led to a strong undercurrent of caution, most obviously highlighted by lower levels

of confidence in the outlook post 2016. According to Emerging Trends Europe, the five leading cities for investment prospects in 2016 are Berlin at Number 1, followed by Hamburg, Dublin, Madrid and Copenhagen. Many interviewees back the German capital to thrive well beyond 2016, based on its young population and its growing reputation as a technology centre, as well as the land available for development. The vast majority of respondents are confident in their ability to thrive in 2016. However, they acknowledge it is an increasingly competitive global field for real estate. They are aware that if the wall of capital recedes, European markets could be left exposed. Then it will be the strength of the underlying market fundamentals and management’s operational skills that come into focus. Which brings us back to occupiers. The clear challenge to the industry is to be less about bricks and mortar and more about service. As one interviewee concludes: “Twenty years ago we had tenants, now we have customers. In 20 years’ time we’ll have guests.” Europe’s real estate industry is very optimistic about its business prospects in 2016, albeit slightly less confident than it was a year ago. Over half of the property professionals surveyed by Emerging Trends Europe indicate that headcounts will be static, and while profit expectations are slightly down on 2015, very few –7 percent – expect to do worse. “Europe looks well set,” concludes one global investor. “There is an improving macro-economic picture, unemployment is improving, supply has been minimal for many years, and banks and investors are finally becoming

active in terms of cleaning up their balance sheets and selling assets. That is creating a lot of interest.” One reason for such a relatively benign view of European markets in 2016 is that, against a backdrop of continuing low interest rates, the difference between real estate and bond yields remains attractive. “Everybody wants to increase allocations to real estate because it offers returns that you cannot achieve with a similar risk level in bonds.” The sheer weight of capital bearing down on European real estate has once again boosted business for many of those canvassed for this year’s report. And as many as 87 percent of them believe that global capital flows will continue to influence their investment strategy over the next five years. “There is a continuing appetite for real estate, and that demand is coming from a pretty broad spectrum of investor types – pension funds, retail investors, wealth management, sovereign wealth and the larger insurance companies.” The most bullish about their business in 2016 are respondents from Southern Europe. No doubt this comes from a very low base, but none the less reflects economic recoveries in their countries. Spain particularly is increasingly seen as a destination for mainstream investors rather than opportunistic capital. Last year respondents in Ireland were the most confident in Europe about improving profitability and they remain upbeat for 2016, as this one-time distressed market returns to normality. UK-based respondents, meanwhile, have benefited hugely from being part of Europe’s strongest economy and biggest property investment market; over half of them ex-

pect to increase their profits in 2016. In interview, however, the UK contingent is more circumspect. They are aware that their market is further through the property cycle than anywhere else in Europe. The CEO of one REIT puts it bluntly: “We have been de-gearing since the end of 2014 when we committed to our last speculative development. If you think the market is going to go up, gear your balance sheet. If not, de-gear.” At the other end of the scale is Russia. Last year two-thirds of Russian respondents predicted a decline in fortunes. This time, just less than a third say things will get worse in 2016, which is progress of sorts, but still grim. “It’s about survival,” says one. But for the Eurozone, a key indicator for 2016 can be gleaned from the fact that business sentiment in both Germany and France is evenly split between those who believe they will do better in 2016 and those who expect it to be the same as 2015. Says a German lender: “We are positive but not outright bullish; there is a good number of deals to be done. The last three or four years it’s just been a straight line going up, and that is not the case now.” No-one expects unbridled growth. There is a significant undercurrent of caution across Europe as a result of geopolitical issues, political uncertainty and economic decline elsewhere, all of which could escalate and impact on real estate. Last year’s concerns over Greece and the break-up of the Eurozone have eased for now, but only to be replaced by the possibility of Brexit. The global oil glut has sent oil prices plunging, and with this a likely cut in allocations

to real estate from some oilproducing states. Russia’s conflict with Ukraine remains a threat to the region. And Middle Eastern conflicts have led to terrorist attacks in Paris and the mass movement of people into Europe, on a scale not seen since the Second World War. “Everybody has become a sideline economist and politician,” says a banker. “You have to be aware of what’s going on because the windows to do things have become so much tighter, and the volatility in the markets moves so rapidly. In the public markets you have to be careful. In the private markets you have to have a view.”

Shortage of assets In some respects, the outlook for 2016 suffers by comparison with 2015 – how can such extraordinary investment be sustained? “The climate is good now but we think the market will gradually become more expensive and opportunities will narrow. Windows are already closing,” says one fund manager. So while 39 percent of survey respondents expect the European economy to improve in 2016, it is not enough to eradicate the disconnect between capital flows and somewhat shaky occupier demand. “People are investing not on the expectation of rental growth but just because of low interest rates and the perception that real estate is a safe haven,” says a German interviewee. One pan-European investor points out that “weight of money can increase values, but it can’t increase rents”, adding: “People keep justifying Spain on the fact that

it has had four quarters in a row of GDP growth but actually it also has had quite a few months of deflation. And that could well feed through to rents.” However, most of Emerging Trends Europe’s constituency is more concerned about deploying capital in 2016. “Because of geopolitics everyone is looking at countries like Germany, the Netherlands and the UK, and there is an overload of capital. We are not comfortable with the price of core assets,” says one Dutch institutional investor. All across Europe, the industry is complaining about the continuing lack of prime assets, and over 40 percent of respondents expect availability to get worse; pricing is a worry. “We are close to the top ... the end of the yield compression story,” the CEO of a London-based REIT says. In Belgium, one developer warns: “The market is overheating. We have offices at 4 percent now. Prices are very high. One has to be careful.” However, no-one is predicting a downturn: “For the next 12 months I think it’s going to be the same; things will be expensive and maybe even get more expensive. But it doesn’t feel stupid like it did in 2006 and 2007.”

The search for returns One of the running themes in Emerging Trends Europe over recent years has been the shift of opportunistic capital into the region’s distressed markets – first the UK, then Ireland and Spain. The narrative has become more complex, and many now believe Continued on p. 21

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industry insights by experto consulting

Fruit Sapplings and Georgia Keti SIDAMONIDZE and Ludovic GIROD

God’s Land of Georgia is Ready to Bloom

here is one popular myth about Georgia that has been shared throughout generations. It tells us the story about the division of the Earth among various nationalities once initiated by the God. After celebration of their traditional feast accompanied with toasts for the God’s glorification, Georgians arrived too late for the great event, by the moment the Earth had been already divided. Having sympathy towards these people, the Lord decided to give them a piece of land he preserved for himself. The land of Georgia was referred to as the “God’s land” for its beauty since ancient times. The beauty of the Georgian landscapes is incontestable and, what is more, there is a big opportunity enclosed in them – a potential for agricultural development. Favorable natural conditions contribute to it. For example, due to a variety of microclimates, Georgia is capable of growing different types of fruits, even subtropical ones as is the case on the western coast of the country. The central regions are well adopted for the growth of fruit gardens while the eastern part of the country, namely Kakheti region, has vast spaces covered with the vineyards. This picturesque description can be completed by mentioning a considerable number of sunny hours per year, about 1352-2520, a favorable rainfall index (1.140) as well as fresh water reserves: there are 25 075 rivers flowing in Georgia. Despite these conditions, the agriculture of the country showed the signs of a lumbering and slow growth up to the year of 2012 when the Georgian government opted for the agriculture and its strategic development as a priority for the country. The governmental support is readable in the statistical data. Starting from 2012, the public spending on agriculture amounted to 2.9% that is a greater index in comparison to the years 2004-2007 with an average rate of 2%. Along with the rising public expen-

ditures, there is also a support for the sector coming from foreign direct investments (FDIs). The agricultural sector represents an on-growing field of interest for the FDIs. Their number equaled 52.9 million GEL in 2013 that is twice more than in 2012 (26.6 million GEL). The participation of international donors such as ENPARD has a positive impact on the overall dynamism of this field as well. In order to seize the importance of the sector, it is necessary to mention that in 2015, according to the Geostat, the agriculture accounted for 9.2% of GDP and, at the same time, created the jobs for, approximately, 55% of Georgian population. As result of the unsuccessful agrarian reform implemented in the 90-s and waves of privatization that lead to fragmentation of farm households and propensity to subsistence farming, the agriculture sector still faces the challenges: the sector covers only 65% of local demand, while remaining products are imported from abroad. Along with it, there is a fast growing food processing industry represented by such giants as Marneuli, Kula and Campa factories with an increasing demand for raw products. To diminish the dependence on imports and to

satisfy the local demand, several initiatives have been undertaken by the government. These initiatives will also help to develop export potential, contribute to its variety and, in this way, to mitigate the vulnerabilities to the external shocks. One of them is a project “Plant the future” run by the Agricultural Projects Management Agency (APMA). According to Mariana Morgoshia, Director at APMA, the project aims at developing intensive gardening and stimulating the effective usage of agricultural land. The project “Plant the future” consists of two significant elements: co-financing of perennial gardens and nurseries. As far as perennial gardens are concerned, the project co-finances the purchase of saplings (up to 70%) and drip irrigation system (about 50%) that is considered to be a capital intensive acquisition. It provides the farmers, the beneficiaries of the project, with a free technical assistance. To render this information even more palpable, it is important to mention that from March 2015 till June 2016 there were 233 beneficiaries of the project and, consequently, more than 1,431 ha of orchards have been established. It can be an interesting

deal for the foreign companies, producers of saplings, as the project also co-finances the purchase of the imported seedlings. There is a room for foreign providers as 34 Georgian certified nurseries cannot fully satisfy the local demand. The saplings are still imported from Turkey, Italy, Serbia and the USA. Some big Georgian companies - exporters such as Vanrik Agro Group, producers of blueberries, blackberries and raspberries, even have their own laboratories to work on production of seedlings as well as on the innovative methods for accelerating growth. It shows the dynamism of the sector and its search for new effective solutions for increasing the output. Last week, Experto Consulting hosted a French delegation representing STAR EXPORT, a division of STAR FRUITS. For almost 50 years, the company has been searching for the best fruit varieties worldwide to make them readily available for arboriculturists. During the official visit in Georgia the delegation met with all important stakeholders of the industry representing both public and private sectors. Director Serge Escorihuela and Export Specialist Yevgeniya Zenina assessed the opportunities of

the Georgian market and they were able to acquire satisfactory answers from the prospects. Star Fruits constantly searches for innovative solutions thanks to their rich selection of available varieties and Georgia could benefit from shared experience. The entry to the market will be even more welcome for foreign investors because there are few Georgian entrepreneurs willing to get involved in the sector. Giorgi Chonishvili, the Director of Complex Agro that has been present on the Georgian market for more than 12 years, gives the following explanations to this situation: “the profit to the sapling nurseries comes in a long term, to be more precise, approximately, in four years because the production of saplings has an 18 month cycle”. This condition makes the environment less attractive to the new comers, beginners in the field of seedling production. According to Mr. Chonishvili, another perspective will await for the companies introducing to the Georgian market the seedlings with enhanced properties, prone to the accelerated growth because a great number of locally based nurseries still use out of date technologies for seedling production. There

is also a high demand for the rootstocks from the orchard owners. The foreign companies with secure capital will be able to create a competitive product because of the usage of better facilities seedling nurseries require, such as greenhouses and/or drip irrigation systems. They will also have an opportunity for tapping into a big export market represented by such countries as Uzbekistan, Russia and China. Furthermore, the foreign entrepreneurs can rely on the guidance of Scientific-Research Center of Agriculture (SRCA) that works in collaboration with Agricultural Projects Management Agency. SRCA has conducted research works determining the best perennial plants to be planted in different regions of Georgia that can become useful guidelines for the interested companies. General favorable business environment in Georgia is also an important contributor to the attractiveness of the sector. Georgia is a transparent country with no corruption, a low cost labor market and a low-level taxation system. Low land cost could be mentioned as another opportunity: 1 ha of good quality agricultural land costs about 2.5-5 thousand USD. Moreover, there still are available arable lands in Georgia. Only in the region of Shida Kartli there is a potential for growth of 10 thousand ha of orchards that in turn implies a necessity of additional 2.5-5 million seedlings for the region. Even with a creation and extension of the orchards in Georgia, the local demand for seedlings will always persist because of the process of natural renewal. Due to this process, some seedlings die and should be renewed. This particularity of the nature offers further prospects for the development of the market of seedlings in the country. Uniting together such factors as favorable climate conditions, business environment and the governmental support, Georgia becomes an attractive destination for sapling production. With its 44% of arable lands, the country has all the potential to become the country of the orchards that will be another justification for its mythical attribute – the God’s land.

Central European construction market growth will speed up in 2017 Continued from p. 12

be spent on the implementation of road infrastructure construction projects. Most of this amount is to be channelled toward motorway construction projects. Moreover, low wages and a well-educat-

ed labour force will likely attract more foreign investment not only in industry, but also in business services, in particular SSC/BPO.

Bulgaria A strong influx of EU funds

from the 2014-2020 budget, along with an improvement in the absorption rate, will increase public investment. However, in the wake of the expected slowdown of public investment in 2016, EU funds should fuel general government investment to a greater extent from 2017-2018 on-

wards. A total of €5.6bn is to be invested in constructing 597 km of motorways and 914 km of expressways by 2020. Most of the priority motorway projects are part of the European Corridors 4, 7, 8 and 9. In non-residential construction, limited demand and the scarcity of develop-

ments in the pipeline suggest that the retail segment will lag behind the other parts of the non-residential construction market in the next few years. Unlike the retail sector, industrial and warehouse construction is far more promising. Pharmaceutical companies, companies from

the automotive industry and companies producing electrical equipment had the largest impact on new developments. Although pre-crisis levels will not be achieved by 2020, nonresidential construction’s overall trend should bring stable growth in output in 2016-2020.

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Zurich remains the most costly city in Europe mainly due to the weak Canadian dollar. The country’s highest-ranked city, Vancouver (142), fell twenty-three places. Toronto (143) dropped seventeen spots, while Montreal (155) and Calgary (162) fell fifteen and sixteen spots, respectively.

The FINANCIAL

ong Kong tops the list of most expensive cities for expatriates, pushing Luanda, Angola to second position,According to Mercer’s 2016 Cost of Living Survey. Zurich and Singapore remain in third and fourth positions, respectively, whereas Tokyo is in fifth, up six places from last year. Kinshasa, ranked sixth, appears for the first time in the top 10, moving up from thirteenth place. Other cities appearing in the top 10 of Mercer’s costliest cities for expatriates are Shanghai (7), Geneva (8), N’Djamena (9), and Beijing (10). The world’s least expensive cities for expatriates, according to Mercer’s survey, are Windhoek (209), Cape Town (208), and Bishkek (207). New York City is used as the base city for all comparisons and currency movements are measured against the US dollar. The survey includes over 375 cities throughout the world; this year’s ranking includes 209 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.

Europe, the Middle East, and Africa Two European cities are among the top 10 list of most expensive cities. At number three in the global ranking, Zurich remains the most costly European city, followed by Geneva (8), down three spots from last year. The next European city in the ranking, Bern (13), is down four places from last year following the

Asia Pacific

weakening of the Swiss franc against the US dollar. Several cities across Europe remained relatively steady due to the stability of the euro against the US dollar. Paris (44), Milan (50), Vienna (54), and Rome (58) are relatively unchanged compared to last year, while Copenhagen (24) and St. Petersburg (152) stayed in the same place. Other cities, including Oslo (59) and Moscow (67), plummeted twenty-one and seventeen places, respectively, as a result of local currencies losing significant value against the US dollar. London (17) and Birmingham, UK (96) dropped five and sixteen places, respectively, while the German cities of Munich (77), Frankfurt (88), and Dusseldorf (107) climbed in the ranking. A few cities in Eastern and Central Europe climbed in the ranking as well, including Kiev (176) and Tirana (186) rising eight and twelve spots, respectively. Tel Aviv (19) continues to

be the most expensive city in the Middle East for expatriates, followed by Dubai (21), Abu Dhabi (25), and Beirut (50). Jeddah (121) remains the least expensive city in the region despite rising thirty places. “Several cities in the Middle East experienced a jump in the ranking, as they are being pushed up by other locations’ decline, as well as the strong increase for expatriate rental accommodation costs, particularly in Abu Dhabi and Jeddah,” said Ms Constantin-Métral. Despite dropping off the top spot on the global list, Luanda, Angola (2) remains the highest ranking city in Africa. Kinshasa (6) follows, rising seven places since 2015. Moving up one spot, N’Djamena (9) is the next African city on the list, followed by Lagos, Nigeria (13) which is up seven places. Dropping three spots, Windhoek (209) in Namibia ranks as the least expensive city in the region and globally.

The Americas Cities in the United States have climbed in the ranking due to the strength of the US dollar against other major currencies, in addition to the significant drop of cities in other regions which resulted in US cities being pushed up the list. New York is up five places to rank 11, the highest-ranked city in the region. San Francisco (26) and Los Angeles (27) climbed eleven and nine places, respectively, from last year while Seattle (83) jumped twenty-three places. Among other major US cities, Honolulu (37) is up fifteen places, Washington, DC (38) is up twelve places, and Boston (47) is up seventeen spots. Portland (117) and Winston Salem, North Carolina (147) remain the least expensive US cities surveyed for expatriates. In South America, Buenos Aires (41) ranked as the cost-

liest city despite a twenty-two place drop from last year. San Juan, Puerto Rico (67) follows as the second most expensive location in the region, climbing twenty-two spots. The majority of other cities in South America fell as a result of weakening currencies against the US dollar despite price increases on goods and services in countries, such as Brazil, Argentina, or Uruguay. In particular, São Paolo (128) and Rio de Janeiro (156) plummeted eighty-eight and eighty-nine places, respectively, despite a strong increase for goods and services. Lima (141) dropped nineteen places while Bogota (190) fell forty-two places. Managua (192) is the least expensive city in South America. Caracas in Venezuela has been excluded from the ranking due to the complex currency situation; its ranking would have varied greatly depending on the official exchange rate selected. Canadian cities continued to drop in this year’s ranking

This year, Hong Kong (1) emerged as the most expensive city for expatriates both in Asia and globally as a consequence of Luanda’s drop in the ranking due to the weakening of its local currency. Singapore (4) remained steady while Tokyo (5) climbed six places. Shanghai (7) and Beijing (10) follow. Shenzhen (12) is up two places while Seoul (15) and Guangzhou, China (18) dropped seven and three spots, respectively. Mumbai (82) is India’s most expensive city, followed by New Delhi (130) and Chennai (158). Kolkata (194) and Bangalore (180) are the least expensive Indian cities ranked. Elsewhere in Asia, Bangkok (74), Kuala Lumpur (151) and Hanoi (106) plummeted twenty-nine, thirtyeight, and twenty places, respectively. Baku (172) had the most drastic fall in the ranking, plummeting more than one hundred places. The city of Ashkhabad in Turkmenistan climbed sixty-one spots to rank 66 globally. Australian cities have witnessed some of the most dramatic falls in the ranking this year as the local currency has depreciated against the US dollar. Brisbane (96) and Canberra (98) dropped thirty and thirty-three spots, respectively, while Sydney (42), Australia’s most expensive ranked city for expatriates, experienced a relatively moderate drop of eleven places. Melbourne fell twenty-four spots to rank 71.

surveys & analysis

MERAB PACHULIA, GORBI

More Russians Than Georgians Regret Collapse of USSR

hen the Soviet Union collapsed 25 years ago, almost 300 million of our “ex-Soviet” compatriots were faced with making a choice for their own country’s future. Some got lucky and ended up in the EU and NATO. Others are still striving to become club members; a few have almost no chance, especially with one former Soviet state playing the harmful role of big brother. How do Russians and Georgians feel, after a quarter century, about the disintegration of the Union of Soviet Republics? To gauge this and several other interesting issues, the Levada Center of Russia and GORBI have designed survey questions and asked a representative sample of 1600 and 800 Russians and Georgians, respectively. While the restoration of some elements of the Soviet system is a considerable issue in Russian society and their propaganda machine works without failure almost like a Kalashnikov gun, in Georgia

this is not a high level issue. However, truth to be told there seems to be a considerable increase of anti-Western propaganda from some political players. Still, going back to the USSR seems not very attractive for even the poorer segments of society. While we can’t even dream about restoration of the Great Georgian Nation or expanding our political and national interests to neighboring countries, it still seems counterintuitive for us to support turning Russia into a super power once more. Based on the survey results, both nations view the demolition of USSR in different ways. While the majority (53%) of Russian respondents regret the destruction of the Soviet Union, 12% less Georgians share the same feelings. Almost a third of surveyed Russians have no regrets, and 46% of Georgians also don’t care much about the collapse of the USSR. This column is not meant to present a detailed analysis, however respondents’ profiles

Chart 1: Q. Do you regret disintegration of the Soviet Union in 1991? ? (%)

Source: Levada/GORBI opinion surveys.

play a key role and there are clear positive ties between the volume of consumption of media, generation of respondents, and income vs how they perceive the disintegra-

tion of the USSR. One interesting moment is also found thanks to this research: if we judge by net rating (not regretting collapse – regretting) Russians are

significantly more concerned than Georgians about the “failure” of the Soviet Union, -22% vs +5% respectively. The bottom line is that the USSR will never be back - not

only in the form that it used to be but even in any approximation to that - regardless of how many of us still want one man to lead us to a Soviet paradise. Some Americans also, I believe, are talking about better times when hamburgers were tastier and cheaper…. And, I am also missing the USSR and would be thrilled to go back to the late 70...s for a week as long as I had a guarantee of returning back. GORBI is a regional hub for partner organizations and international clients. Since 2003, GORBI remains an exclusive member of Gallup International research network for its two decades of experience in survey research in postSoviet Union countries, as well as Mongolia and Iraq. This data was provided exclusively to the Financial.

CMYK

HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 27 JUNE, 2016

construction business

Cool Off at Gino Paradise! The FINANCIAL -- Gino Paradise, the multi-functional complex in Georgia, is offering its splash paradise and water adventure to guests, inviting them to experience its grand water-park and a unique, relaxing wellness and spa centre, fitness room and food courts. The promotion and encouragement of leading a healthy lifestyle remains on the agenda of Gino Paradise in 2016. For this purpose Gino Paradise plans to further develop and improve its complex as well as its services. Very soon a new outdoor swimming pool will be opened at Gino Paradise. In addition, Gino Paradise plans to offer various cultural and adventure events, grand concerts, festivals, and the ‘Summer Gino Olympics’ this summer. A new summer open-air pub and new coastal lounge are what Gino Paradise expects to attract a number of visitors. In these new areas guests will be able to enjoy the combination of ecologically clean surroundings with an exciting environment. Turning Gino Paradise resort into a tourist hotspot is one of the goals of the company’s management. To achieve this, Gino Paradise is also developing a hotel chain, building a hotel which is a part of the Gino Green City project. “We believe that fun and healthy ways of living are interconnected concepts. Our goal is to offer customers of any age a distinctive and unforgettable place of entertainment and relaxation. Gino Paradise is a four season resort, offering services 365

days a year,” said the Director General of Gino Paradise, Ramaz Mikadze. It is always summer at Gino Paradise, claims Mikadze, citing as an argument the various activities they offer throughout the year. As of today the Gino Paradise Water Park is one of the biggest attractions in Eastern Europe, particularly in the Caucasus region. It offers a 31-meter high water slide, indoor and outdoor swimming pools and recreation rooms.

Gino Paradise also includes a private coastal zone and offers visitors a comfortable coastline equipped with umbrellas, deck chairs, a variety of attractions, dressing rooms and showers. Meanwhile, Gino Spa centre is distinguished by its aroma and health procedures as well as the variety of saunas and hydrotherapy that are available there. Those who want to work out are gladly invited to visit the fitness centre which offers

the latest cardio and strength equipment, aerobics room, which are designed for different types of training for the complex. “Step by step customers’ behaviour has been changing and more and more people have the desire to visit Gino Paradise during all four seasons. We have loyal guests who constantly visit us. This proves that our daily hard work has provided results and we have gained the confidence of our customers. I

think the biggest challenge and the biggest victory is precisely gaining the confidence of customers,” Mikadze said. The most popular services at Gino Paradise are the wave pool, toboggans and spa centre. “Our professionals offer unique massage and spa procedures and our customers love it,” Mikadze said. Meanwhile, he added that the ‘Gino Junior’ birthday centre was opened this year.

“This year we offered a unique novelty to our customers. This is the birthday centre Gino Junior. Now it is possible to celebrate your birthday in the water world. It is one of the best birthday centres in Georgia nowadays. Gino Junior is gradually gaining a reputation and recognition among customers and is being established as a popular service,” Mikadze said. He added that Gino Paradise is an ideal destination for individuals, friends and families. The services are suitable for people of any age or tastes. In total EUR 29 million was invested in the multi-functional complex Gino Paradise, and the project has since turned out to be commercially profitable for its founders. Getting involved in the country’s hospitality sector and becoming a new player was another challenge for the Gino Paradise team. Hotel Dino was introduced to the Georgian hospitality market last year, proving popular with many. “Tourism development in Georgia played a big role in developing not only the aqua park but starting a hotel business as well. There was big demand for hospitality services from our neighbouring countries’ citizens who are our keen customers. The majority of them come to Georgia’s capital Tbilisi to enjoy the complex recreation service with their families and friends,” Mikadze said. Due to the fact that Dino Hotel is working at full capacity, Gino Paradise will soon introduce new types of hotel complexes such as cottages and apartment hotels too.

European Real-estate Trends 2016, PwC Continued from p. 18

the big movements by these players are over. That’s not to say sales of distressed assets are at an end. One UK interviewee suggests: “There is still some way to go for banks ‘right-sizing’ their loan books and this will drive more asset sales, particularly retail.” Or as one global fund manager puts it: “I don’t think there are any actually distressed markets in Europe. There are markets in different stages of recovery.” To that end, Spain still attracts much attention, but with the scrutiny now on underlying tenant demand. “The Spanish economy shows an upward trend, and for the first time since 2007, macroeconomic fundamentals point towards a recovery,” says a supporter. Signs of investors diverting their attention from Spain to Italy were already evident last year and that trend is intensifying, again with property fundamentals to the fore. “The distinction with Italy is that it was never built on a strong dosage of debt so the wheels didn’t come flying off quite as abruptly. And northern Italy is an economic powerhouse and really quite an interesting market.” Similar judgment calls are being made on other recovering markets, even selectively in Central and Eastern Europe. As a Czech investor points out: “We are seeing occupancy in our buildings go-

ing up and quite good demand from tenants. We are seeing the banks being much more willing to lend on new acquisitions as well as refinancing existing portfolios. Barring any economic disasters, we think that will carry on.” For all the attractions of recovering markets, the majority of investors are settling for relatively safe, modest returns by deploying capital into core real estate in major cities. That trend will continue through 2016. As one US player puts it: “We see continued strength in the mature world – the US and Europe – with a huge degree of capital seeking high-quality real estate. The emphasis should be placed on ‘high quality’. In general, the investment world is concerned looking forward, and has fairly low return expectations, which explains what’s going on in the real estate space.” This suggests that European real estate will remain a safe haven for some time yet. Investors do not appear to have lowered their targeted returns for 2016, compared to what they indicated in the 2015 survey. Another global investor concludes: “Factors like what is happening in emerging markets and political volatility can have an impact, but the signals are that the sustained appetite for what the asset class can offer isn’t going to change. Fundamentally, real estate appeals to investors for a diverse range of reasons that won’t diminish over the next 12 months.”

Top trends Logistics rules

One of the most vibrant sectors identified by Emerging Trends Europe over recent years has been logistics, largely on the back of rapid growth in online retail sales. Some are viewing logistics as a proxy for retail property, but less highly priced based on its location. There was a veritable stampede of capital into the sector during 2015 and the signs are that there will be more of the same in 2016. “We see a very strong capital flow and bigger allocations to logistics,” says one specialist player. “Logistics is becoming an institutional investor product.” Some three quarters of those surveyed regard its investment prospects as “good” or “very good” but, if anything, the interviewees are far more effusive in their support of logistics and the rewards it can offer. “The guy who is not earning money in this sector now must be a little bit stupid,” says one interviewee. Some have just made or are about to make a strategic move into logistics; as one French fund manager enthuses: “We love logistics and that’s where we see lots of opportunities.” Another French investor puts it like this: “Prices of logistics assets have become crazy with some initial yields as low as 6 percent.”

Too crazy? There are certainly dissenters, voicing some concern over the yield compression in logistics. But the overwhelming majority of Emerging Trends Europe’s constituents are backing the sector, at least for one more year. “It is expensive but the yield compression is still coming through and you’re also going to see rental growth,” says one fan.

Development returns

“With prices so high you have to look at where you can develop to find adequate returns. The markets for income- producing real estate are pretty fully priced so you want to be creating assets that you can sell into that market.” That’s a pan-European institutional investor speaking, but it sums up the approach to development of a good number of those canvassed by Emerging Trends Europe: not throwing caution to the wind but a measured and pragmatic means of securing returns. “I wouldn’t say that we’re becoming more risky because we’ve been doing development for years – we’ve done €5 billion over the last few years. It isn’t a huge part of our assets under management but it is something we feel comfortable doing,” says a French institutional investor. Global investors are taking on development projects, sometimes building or redeveloping an entire new urban district. Not only does

this provide them with shiny new core assets, but also gives them control over the process. What is more, development is not always seen as a means of investing in core property. “We will develop as valueadd, really to open the market and cover it more broadly for our investors. You need to find higher returns somehow,” says a cross-border fund manager. “Yes, we are taking on more risk,” says a German investment manager. “We are going into development and value-added stuff, properties with leasing risk and cap-ex requirements. That is quite normal to stay in the market. We do it very wisely and not too aggressively, but that will continue because the availability of prime assets is very challenging for all of us.” There are even development plans for London, despite some late-in-the-cycle jitters about the state of the office market. Says one CEO: “We are in very good shape. People would maybe say that we are cautious but we are prepared to be speculative. You need to know your markets. We know how to build and are a very hands-on business.”

City connections

“New market opportunities are now cities rather than whole countries.” This approach to investment is gaining currency in Europe. Opportunities flow from urbanisation, according to a

Dutch institutional investor: “We don’t invest in countries anymore, we invest in urban areas.” Yet success here is not simply about passive acceptance of the move to urban life, but identifying those cities that are progressive in their approach to infrastructure. The pressure comes from delivering all the necessary development to service this increasing urbanisation. “If cities are not planning or delivering infrastructure then they are declining,” says one planner. “Availability of more infrastructure – successful cities are all about trade and exchange – and connectivity to every asset class are key to attracting the best talent and securing investments.” In this context, it is no surprise that Berlin tops the city rankings this year, for both investment and development prospects, even though Emerging Trends Europe’s constituency has a more mixed outlook for Germany as a whole. “Berlin has come on our horizon much more strongly just because of the wealth of opportunity there,” says a pan- European fund manager. Many agree. As one London-based property player, says: “My one long-term bet is Berlin. It has no manufacturing, but it is the seat of government and it is gradually becoming an important city for Germany, and it has the land to grow. It has also got an innovative, young population and I think tech in Berlin will be a sector that is going to expand.”

CMYK

HEADLINE NEWS & ANALYSIS

construction business

27 JUNE, 2016 | FINCHANNEL.COM

BREXIT: What companies should know The FINANCIAL – After months of fierce debate and a policymaking hiatus, the UK electorate has voted in favour of leaving the European Union (EU). While the broad direction is set, companies will still face considerable uncertainty until the UK’s exit strategy is defined and trade negotiations (including the trans-border movement of people) with the EU and other countries are completed. Marsh & McLennan Companies, one of the leading consulting firm has underlined three interrelated challenges that should be uppermost in the minds of company leaders: the economic and political risk environment, corporate strategy imperatives, and workforce implications. Company researchers briefly described four possible Brexit scenarios (not all of which are equally likely), with a particular focus on the UK’s relationship with the EU. The UK becomes part of the European Economic Area (EEA). As an EEA country, the UK would have access to the single market. EU regulations and directives would still apply, the UK would still contribute to the EU budget, and it would not have an independent immigration policy. This scenario is likely to have the lowest impact on the economy and trade. The UK enters into a bilateral integration treaty with the EU. This would involve some UK access to the single market, although not full access for goods and services. It is expected this scenario would have a moderate impact on the economy, trade, and immigration. A tariff-free trade agreement is made between the UK and EU. The UK would have its own immigration policy and an independent trade policy with likely implications for the trans- border movement of people. This scenario would provide some access to the single market and would probably have a moderate impact on the economy. The UK makes no access agreements and trades with the EU as a third country. If only World Trade Organization terms apply, the UK would trade with the EU in a similar way to countries like the US, and UK immigration policy would become independent. This scenario would likely have the highest impact on the economy and the lowest likelihood that the UK would be able to trade under the single market.

The New Risk Environment

UK is the first nation state ever to leave the EU. The lack of historical precedent, along with the significant arguments to Remain advanced by expert bodies, suggest that UK markets will see significant volatility over the rest of 2016 as the shock is absorbed and sentiment fluctuates in response to political and economic announcements. Sterling may come under severe pressure, the stock market may sag, and UK property prices may tumble as domestic and foreign investors fear a significant shock to the UK economy. The Bank of England will implement contingency plans, including additional auctions of sterling to ensure the banking system has sufficient funds to operate in the event of turbulence. But decisions on interest rates or quantitative easing will be guided by a view on the strength of “countervailing forces” on the economy, and the possibility that a fall in the value of sterling alone might provide a sufficient stimulus for the economy by making UK exports more competitive. All the same, it is widely feared that heightened uncertainty will dampen the immediate outlook for GDP growth, as households defer spending on major purchases and companies postpone investment projects and recruitment plans. Regulatory uncertainties may deter foreign direct investment to the UK in the short term – in the months running up to the vote, IPOs and private equity deals withered and corporate credit demand softened. How long this might last is a critical factor: while the formal exit process from the EU may last two years, it is not inconceivable that the negotiation of trade deals with the EU and other countries (covered to date for the UK by EU trade arrangements) will take substantially longer. Finally, there are the risks associated with economic and political contagion. A fragile global economy may be further battered by the spill-over from GDP impacts, trade agreement uncertainties, and investor sentiment. Moreover, the success of an agenda that only a few years ago was scarcely conceivable raises the prospect of popular demands in other countries to leave the European Union or, at the very least, to negotiate better terms, thereby potentially undermining the coherence of the region’s proposition to its members and its interface with the wider world. The UK’s decision may also give further impetus to the increased deployment of protectionist measures already observed across G20 countries.

Corporate Strategy Imperprraives Under the more likely scenarios (based on the aspirations declared by pro-Brexit politicians), global non-EU multinational companies and EU-headquartered firms with sizeable UK operations will need to rethink and possibly restructure their UK operations, given the likely additional cost and complexity associated with accessing EU markets. UK-headquartered firms with global operations, domestic firms, and government bodies will all face tactical challenges, but will be less affected in the medium term. Some industries will be affected more than others, with the most significant impacts anticipated in financial services, with a particular challenge as to London’s position as a global hub, since it is unclear what will happen to “passporting” rights – the ability of financial services firms based in one EU country to operate in another without setting up a new legal entity. Banks (both UK- and EU-domiciled) may be obliged to set up additional operations or headquarters elsewhere, with revenues travelling accordingly. For example, regulatory demands may result in a significant proportion of capital markets and investment banking revenues currently achieved in the UK migrating to the continent. Similarly, the right of insurers and brokers to passport into the EEA could be restricted following the UK’s two-year transition period. Insurers wishing to carry on business in other EEA states may be required to obtain licences, or form a new legal entity based in the state. Equally, EU insurers may need an additional licence to carry on insurance business in the UK, or to form a new UK entity. Writing business through local branches would require local authorization and capital being deposited to support the branch, in certain cases. In advance of full regulatory clarity, some major insurers with UK operations may establish a greater presence in continental Europe, in order to operate more easily under a single licence. Successor UK approaches to a number of major pan-European regulatory regimes (most notably Solvency II) will need to be negotiated, although it seems unlikely that UK regulators would want to significantly depart from the scope and aims of the established re-

gimes. Insurers may additionally be affected should the Freedom of Services Directive – the right to provide services on a cross-border basis within the EU – cease to apply to the UK. For insurers, this Directive is significant as it means that a contract can be underwritten in an EU member country that is different from that in which the risk is located, and it enables multinational companies to secure locally admitted coverage in multiple EU countries. Additionally, there is a risk that UK legal judgments may no longer be enforceable in the rest of the EEA. Impacts are, of course, by no means confined to these sectors. It is easy to envisage impacts in other regulated sectors, such as utilities (a possible watering down of current directives on emissions and renewables) and healthcare (more costly and less efficient pharmacovigilance). Less regulated sectors (such as retail) may be more affected by tariffs and other trade deal consequences. Without wishing to speculate on how much and what is at risk, it is worth recalling the scale of the trading relationships between the UK and other countries. The total volume of traded goods and services between the UK and the EU amounted to £514 billion in 2015 (with the UK having a trade deficit of £68 billion) and those between the UK and the rest of the world amounted to £545 billion (with the UK having a trade surplus of £31 billion).

Workforce Dislocation The concern about immigration that underpinned much of the vote for Brexit will most likely inspire changes to employment and labour market regulation. While the movement of key talent and human resources may be the key concern, there will also be consequences for compensation, benefits, and pensions. Negotiations will now determine the circumstances under which EU citizens will be able to enter and work in the UK, and the conditions in which EU citizens already in the UK, and UK citizens already in the EU, will be able to continue in their current roles. It is likely that some restrictions will be placed on EU workers within the UK labour market – in the order of two million people, who form a significant proportion of the retail, leisure, and service sectors. New bilateral agreements may be required for those organizations offshor-

ing from the UK into the EU, and employment mobility constraints may influence decisions by nonUK multinational companies as to the viability of having their European headquarters in London. Restrictions and changes in the UK labour market for key skills, at executive and other levels, will impact on competitive pay levels in the UK. There may also be an increase in costs for UK citizens living and working within the EU. The UK banking sector is likely to seek changes in banking regulation that affect pay. This may bring an end to bonus caps and other EUsponsored controls, although the Financial Conduct Authority and Prudential Regulation Authority will want to ensure that the direction and spirit of the Financial Standards Board’s requirements continue to be fully met in the UK. Some regulatory changes in the broader market are likely to favour employers, possibly at the expense of a more turbulent employee relations environment. An end to reciprocity on state healthcare costs for foreign nationals across member states could lead to a lack of state-accessible primary and secondary care for expatriate workers. This would generate concern for mobility teams. There may also be an increase in bureaucracy for expat workers, including the compulsory company healthcare provision. Another corollary of these workforce dislocations is the possibility of changes to how personal data is managed and stored, as separation occurs. Companies and employees may also be affected through the performance of their pension schemes, as UK, European, and global markets assess the UK’s decision. Increased volatility in gilt yields and sterling may have further impact on pension schemes, which are already facing record liabilities and increasing deficits, at least in part due to nervousness inspired by the referendum. Trustee boards should consider the impact of future possible market moves on scheme funding positions, sponsor covenants, and their financing and risk management strategies. Marsh & McLennan Companies is a global professional services firm offering clients advice and solutions in the areas of risk, strategy, and human capital. With annual revenue just short of $13 billion, Marsh & McLennan Companies’ 57,000 colleagues worldwide provide analysis, advice, and transactional capabilities to clients in more than 130 countries.

CMYK

HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 27 JUNE, 2016

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CMYK

HEADLINE NEWS & ANALYSIS 27 JUNE, 2016 | FINCHANNEL.COM

euro news

Apples and tomatoes were the top fruit and vegetable produced in the EU in 2015 Spain, Italy and Poland: main producers

Poland harvested 1 in every 4 apples produced in the EU in 2015 (with 25.0% of total EU harvested production), ahead of Italy (19.2%) and France (15.5%). Spain (34.4%), Italy (32.9%) and Greece (23.2%) produced together almost all (90%) EU peaches. Spain (29.0%) was also the main EU producer of strawberries in 2015, followed by Poland (15.6%), Germany (12.5%) and Italy (10.4%). For cherries, Poland was the main EU producer (25.8%), followed by Italy (12.6%), Spain (10.7%) and Greece (10.0%).

The FINANCIAL

n the European Union (EU), just over 2.3 million hectares were devoted to the production of fruit and berries and a further 2.1 million hectares to the production of vegetables. With 636 000 hectares (or 27.1% of the EU total) devoted to the production of fruit, Spain was the leading EU Member State in terms of production area of fruit in 2015, while it was Italy (420 000 hectares, or 20.2%) for vegetables. Apples were the most produced fruit in the EU in terms of quantity, with 12.7 million tonnes har-

vested in 2015 (or almost 25 kg per EU inhabitant), and tomatoes (17.7 million tons, or 35 kg per EU inhabitant) were the main vegetable.

Tomatoes from Italy, cucumbers Apples and peaches and from cherries strawberries Spain, from Poland, from Spain carrots

from the United Kingdom Together, Italy (36.3% of total EU production) and Spain (27.4%) supplied in 2015 almost two thirds of tomatoes produced in the EU. They were followed by Portugal (8.0%), Greece (6.2%), the Netherlands (5.0%), France and Poland (both 4.5%). Three Member States accounted also for around two-thirds of the cucumbers harvested in the EU in 2015: Spain (29.1%), Poland (17.7%) and the Netherlands (17.1%). The production of carrots in the EU was more dispersed across Member States, with the top producers in 2015 being the United Kingdom (14.2%), Poland (13.1%), the Netherlands (10.9%), France (10.8%), Italy (10.3%) and Germany (10.2%). As for courgettes, they were principally harvested in two Member States: Spain (37.6%) and Italy (37.1%).

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HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 27 JUNE, 2016 TBC BANK TBILISI BRANCHES Tbilisi #9 Service Center in Zahesi (Customs Terminal) 0125, 105 A, Mshvidoba St. Vake Branch #1 0179, 41, Abashidze St. Central Branch 0179, 11, Chavchavadze Ave. Chavchavadze Branch #1 0179, 29/31/33, Chavchavazde Ave Vera Branch 0179, 31, Melikishvili St. Parliament Service Center 0118, 8, Rustaveli Ave Mtatsminda Branch 0105, 1, Rustaveli Ave. Rustaveli Service-Center 0108, Marriot hotel Rustaveli Branch #1 0108, 44, Rustaveli Ave. Mtatsminda Branch #2 0105, 22, Leselidze St. Rustaveli Branch #2 0105, 52, Rustaveli Ave. Avlabari Branch #1 0103, 2, Ketevan Tsamebuli Ave. Varketili Branch #1 Javakheti St. Isani Branch 0120, 67, K. Tsamebuli Ave. Vazha-Pshavela Branch #2 0186, 73, Vazha-Pshavela Ave. Vazha-Pshavela Branch #1 0160, 11, Vazha-Pshavela Ave Saakadze Branch 0160, 6, Shartava St. (Saakadze Sq.) Saburtalo Branch 0160, 12, Al. Kazbegi Ave. Tbilisi Central Service Center 0112, Vagzali Sq. 2 Agmashenebeli Branch #1 0102, 138, Agmashenebeli Ave. Marjanishvili Branch #2 0102, 16, Marjanishvili St. Tamar Mepe Branch 0112, 7, Tamar Mepe Ave. Head Of¿ce & Marjanishvili Branch 0102, 7, Marjanishvili St. Tsereteli Branch #2 0119, 73a, Tsereteli Ave. Didube Branch 0119, 117, Tsereteli Ave. Digomi Branch in shop («My House») 0131, Agmashenebeli Alley, 12th km, furniture shop «My House» Digomi Branch in “Goodwill” 0131, 1, Parnavaz Mepe Ave. (Hypermarket Goodwill) Nadzaladevi Branch 0180, 109, Dadiani Ave. Gldani Branch 0172, Mukhiani Settlement, Plot 1/6 Tbilisi Airport Service Center 0158, Tbilisi National Airport

TBILISI ATMS Vazisubani Vazisubani III dstr., II Blk. Sanzona 50, Guramishvili Ave. Nikora Store Vake 11, Chavchavadze Ave. Vake Branch 1, Tamarashvili St. Pharmacy “36.6” 34, Chavchavadze Ave. Trading Center “Pixel” 7, Kipshidze St. 41, Abashidze St. Vake Service Center #1 29, Chavchavazde Ave. TBC Bank Branch 59, Paliashvili St. “Simba” Supermarket 50, Chavchavadze Ave. 15, Phaliashvili St. Aversi Pharmacy Vera 7, Kostava St. 36, Kostava St. Cinema “Amirani” 8/1, Akhvlediani Ave 18, Melikishvili St. 60, Barnovi St. “Fresh Market” 31, Melikishvili St. TBC Bank branch Mtatsminda 13, Rustaveli Ave. Hotel «Tbilisi Marriot» 11, Rkinis Rigi Acura Billiard Room 5, Rustaveli Ave. Rustaveli Cinema 4, Freedom Square 22, Leselidze St. TBC Bank branch 52, Rustaveli Ave. TBC Bank branch 44, Rustaveli Ave. TBC Bank branch 1, Rustaveli Ave. TBC Bank branch Avlabari 84, K. Tsamebuli Ave. 2, K. Tsamebuli Ave. TBC Bank branch Navtlugi 2, Cholokashvili St. “36.6” Pharmacy Varketili 34a, Kakheti Highway 44, Javakheti St. (Varketili Metro) Varketili 3, 4th m/r. Javakheti St. TBC Bank branch Isani-Samgori 39a, Moscow Ave. 169, Khmelnitski St. Supermaket “Isani” subway station 67, K.Tsamebuli Ave. TBC Bank branch Saburtalo 40, Vazha Pshavela Ave. ESM Tbilisi 67, Vazha Pshavela Ave. «Nikora» Shop 68, Kostava St. Public Television Building 22, Bakhtrioni St. 53, Saburtalo St. Nikora store 12, Al. Kazbegi Ave. At Saburtalo Branch 74, Kostava st. Shop “Caesar” Z. Zhvania Sq., 45, Gamsakhurdia Ave. “PSP” Pharmacy 1, Nutsubidze St. 52, Vazha-Pshavela Ave. Mobi Shop Riverside named after H. Aliev At Wissol gas station Turn at 4th Plateau of Nutsubidze 179, Nutsubidze St. “PSP” Pharmacy 26, Kazbegi Ave. Shop “Planeta Z” Vazha-Pshavela V Blk, 4 Bld. 29, Gamsakhurdia Ave. Shop “Okaidi” 6, Shartava St. 4, Gamsakhurdia Ave. 11, Vazha-Pshavela Ave TBC Bank Branch 11, Mitskevichi St. Supermarket 29b, Kazbegi Ave. 73, Vazha-Pshavela Ave. TBC Bank branch 11/5, Dolidze St. Supermartket “Mango” Chugureti 39, Chitaia St. Aversi Pharmacy 7, Marjanishvili St. Marjanishvili branch 19 Tsabadze St. Trade center «Pasazhi» 8, Tsabadze St. Trade center «Kidobani» 4, Khetagurov St. Humana Pharmacy 16, Marjanishvili St. TBC Bank branch 4, Chubinashvili St. Aversi Pharmacy Didube 73a, Tsereteli Ave. At #2 Didube Branch 114, A. Tsereteli Ave.

«Coca-Cola» 117, Tsereteli Ave. At Didube Branch 82, Tamar Mepe Ave. “MedService” Pharmacy 1, Tsereteli Ave. Trading Center “Panda” 7, Tamar Mepe Ave. TBC Bank branch 138, Agmashenebeli Ave. TBC Bank branch 12, Kereselidze St. “Megaline” Trading Center Digomi Digomi District 3/2 Digomi District II BLK. Building 7 Digomi District, 3rd blk. D. Agmashenebeli Alley “Lukoil” Gas station Didi Digomi Entrance of Didi Digomi Trade center GOODWILL 12th Km, Agmashenebeli Alley. Shop “Chemi Sakhli” Nadzaladevi 106, Ts. Dadiani Ave. Nadzaledevi Branch 321, Ts. Dadiani Ave. Aversi Pharmacy 144, Ts. Dadiani Ave. Supermarket Temka Temka, 10th Block, BLD. 2. Gldani Gldani District 1st blk. Supermarket “Bingo” Akhmeteli Metro Trading Center “Mariami” Mukhiani Settlement, Plot 1/6 TBC Bank branch Mukhiani Mukhiani III MKR, Dumbadze Ave., BLK.5a Mukhiani II M/R, Noneshvili St., BLk. 5 “Red A” Pharmacy Avchala 3, Sarajishvili St. “Alfa Express” Ortachala 39, V. Gorgasali St. 28, Gorgasali St. Airport Tbilisi International Airport

CONSTANTA BANK BRANCHES AND ATMS Tbilisi Sadguri Branch 137, Tsinamdzgvrishvili Street Varketili Branch 20, Vazisubani turn Isani Branch 84/86, Ketevan Tsamebuli Avenue Gldani Branch The right side of the Akhmeteli Subway Didube Branch 117, Tsereteli Ave Lilo Branch 2, Chirankhuli Str. Saburtalo branch 28, Vaja-Pshavela Str. Baratashvili Branch 2, Baratashvili Str.

BANK OF GEORGIA TBILISI Mtatsminda-Krtsanisi 3 Pushkin Str. 4 Leselidze Str. 38 Tabukashvili Str. 7 Pushkin Str. 1 Vekua Str. 3 Pushkin Str. Vake-Saburtalo 24 Kostava Str. 29 Vazha-Pshavela Ave. 7 Kipshidze Str. 14 Gamsakhurdia Ave. 22 Bakhtrioni Str. 72/12 I.Abashidze Str. 70 Kostava Str. Sheraton Metheki Palace 10 Melikishvili Ave. 62 Chavchavadze Ave. Mtatsminda-Krtsanisi 8 Rustaveli Ave. (Parliament) 38 Tabukashvili Str. 19 Rustaveli Ave. 4 Freedom Square (Courtyard Marriott) Metro Station “Tavisuplebis Moedani” Metro Station “Rustaveli” 3 Vekua Str. (Populi City) 37 Gorgasali Str. Ortachala Radisson SAS Iveria Hotel Isani-Samgori 10 Ketevan Tsamebuli Ave. 80 Ketevan Tsamebuli Ave. 7 Kalaubani Str. Airport Metro Station “Avlabari” Metro Station “300 Aragveli” Metro Station “Samgori 1” Metro Station “Samgori 2” Metro Station “Varketili” Metro Station “Isani” Temqa Block 10, Bulding 25 44 Moskovi Ave. Vazis ubani block 4 (“Populi”) Vake-Saburtalo 41 Vazha-Pshavela Ave. 23 Chavchavadze Ave. 70 Kostava Str. 16 Gamsakhurdia Ave. 7 Petritsi Str. Melikishvili Str. 10 Gldani-Nadzaladevi 39 Tsotne Dadiani Str. 5 Tornike Eristavi Str. (“Electroplast”) Shopping Mall “Mariami”, Gldani Metro Station “Akhmeteli” Metro Station “Grmagele” Metro Station “Nadzaladevi” Metro Station “Sarajishvili” Metro Station “Guramishvili” Mukhiani, Block 4, Bulding 4 34 Tsotne Dadiani Str., Bulding 8 Metro Station “Elektrodepo” Vake-Saburtalo 1a Bulachauri Str. Metro Station “Politeknikuri Instituti 1” Metro Station “Politeknikuri Instituti 2” Metro Station “Vazha-Pshavela” Metro Station “Sameditsino Instituti 1” Metro Station “Sameditsino Instituti 2” Didube-Chugureti 99 Tsereteli Ave. 18 Tamar me¿s Ave. 60 Tsereteli Ave. 83/23 Davit Agmashenebeli Ave. 142 Davit Agmashenebeli Ave. 19 Tsabadze Str. (“Pasazhi”) 12 Kereselidze Str. 1st turn (“Megaline”) 137 Tsinamdzgvrishvili Str. 127 Davit Agmashenebeli Ave. Metro Station “Vagzlis Moedani” Metro Station “Vagzlis Moedani 3” Metro Station “Tsereteli” Metro Station “Didube” Metro Station “Marjanishvili” 3 Vagzali Str. Gldani-Nadzaladevi Gladni 1 Vekua Str., Block “a” 38 Guramishvili Ave.

ATM’S TBILISI Vake 8 Mtskheta Street 12 eristavi street 72/12 Abashidze Street 48 Chavchavadze Avenue 22/23 Chavchavadze Avenue 22/23 Chavchavadze Avenue 62 Chavchavadze Avenue 50 Chavchavadze Avenue 52 Chavchavadze Avenue

22 Chavchavadze Avenue 78 Chavchavadze Avenue 7 Kipshidze Street 9a nafareuli street 13 Kipshidze Street 2 Berdzenishvili Street 41 abashidze street 81/9 Abashidze Street 3 Tamarashvili Street Tamarashvili Street 16 Phaliashvili Street Tskneti 3 Rustaveli Street 2 Rustaveli Street Saburtalo 67 Vazha-Pshavela Avenue 41 Vazha-Pshavela Avenue 41 Vazha-Pshavela Avenue 2 Vazha-Pshavela Avenue 27b Vazha-pshavela avenue 27a Vazha-Pshavela Avenue 17 Vazha-Pshavela Avenue 27 Vazha-Pshavela Avenue 72 Vazha-Pshavela Avenue Vazha-Pshavela Avenue, II Block 35/37 Shartava Street 7 Shartava Street 21 Dolidze Street vakhushti bridge Saakadze square Samedicino Vazha-Pshavela Politeqnikuri 1 Politeknikuri 2 17a Saburtalo Street 37 Saburtalo Street 70 Kostava Street 70 Kostava Street 26 maisi street 1 26 May square Kostava Street 44 Khazbegi Avenue 10 Khazbegi Avenue 13 Khazbegi Avenue 14 Khazbegi Avenue 12 Khazbegi Avenue bagteriofagi 8 a mitschkevichi street 19 Gamrekeli Street 23 kandelakis street 43 Gamsakhurdia Avenue. gagarini 16 Gamsakhurdia Avenue 2 Gamsakhurdia Avenue 14 Gamsakhurdia Avenue 1a Bulachauri Street 3 mk.2 kv. Nucubidze 175 Nutsubidze Street 221 Nutsubidze Street 25 nutsubidze street Nutsubidze plato III mr. II kv 1 Sandro Euli Street 13 Bakhtrioni Street 22 Bakhtrioni Street 6 Phanaskerteli Street 16 Chikovani Street 25 Kavtaradze Street 4 Gabashvili Street 5 Jikia Street Mtatsminda 2 Freedom Square mtawminda square 3 Pushkin Street 3 Pushkin Street 3/1 Pushkin Street 3 Pushkin Street Tavisuplebis Moedani 7 Pushkin Street 4 Freedom Square 12 Chanturia Street Rustaveli 16 Rustaveli Avenue 8 Rustaveli Avenue 19 Rustaveli Avenue 37 Rustaveli Avenue 2 Leonidze Street 22 Leselidze Street 4, Leselidze Street 38 Tabukashvili Street 2 Baratashvili Street 7 Ingorokva Street GTC 8 Erekle II Street 13 Savteli Streer 20 Akhvlediani street 1 Vekua Street 40 Khetagurovi street rose squire rose squire Vera 28 petriashvili street 25 Kostava Street 24 Kostava Street 44 Kostava Street 1 Khorava Street 10 Kekelidze Street 8 Kuchishvili Street 50 Gogebashvili Street 13 Melikishvili Street 10 Melikishvili Street 10 Melikishvili Street Gldani-Nadzaledevi 2 gudamakhari street Gldani V m/r Block14 Gldani III m/r 2 Khizanishvili Street 2 Dadiani Street 7 Dadiani street 34 Dadiani Street 151 Dadani Street 21 Sarajishvili Street Sarajishvili Grmagele Guramishvili 38 Guramishvili Avenue 33a GuramiSvili avenue 84 Guramishvili Avenue 7 Guramishvili Avenue 84 Guramishvili Avenue Peikrebi street Mukhiani, IV m/r, 4 block Dumbadze str IV m/r, Block 5 Nadzaladevi Nadzaladevi metro Square 15 Khizanishvili Street 31 Khizanishvili Street metro axmetelis mimdebare. mariami metro axmetelis mimdebared 1 Vekua Street 1 Vekua Street Akhmeteli Temka 10 Kv, Block 25 Temka samshobiaro saxli # 5 mimd 34 Khosharauli Street Didube-Chugureti 8 tsabadze street 17 Uznadze Street 1 Tsereteli avenue 60 Tsereteli Avenue 55 Tsereteli Avenue 95 Tsereteli Avenue 110 Tsereteli Avenue 99 Tsereteli Avenue 118 Tsereteli Avenue 118 Agmashenebeli Avenue 127 Agmashenebeli Avenue 80 Agmashenebeli Avenue 96 Agmashenebeli Avenue 1 Agmashenebeli Avenue 89/24 Agmashenebeli Avenue 86/90 Agmashenebeli Avenue 15 Tamar Mepe Avenue 10 Tamar Mepe Avenue 20 General Kvinetadze Street 5 marjanishvili street Marjanishvili 83/23 Agmashenebeli street 1 Chitaia Street 19 Tsabadze Street, pasage 2 Chkheidze Street Tbilisi central Tsereteli Vagzlis moedani 2 Vagzlis Moedani 1 Vagzlis Moedani 2 19 Agladze Street 2 Vagzlis Moedani 95 Tsinamdzgvrishvili Street 137 Tsinamdzgvrishvili Street Mtkvari Left Riverside (mushtaedi) 1 chaladze street Digomi 8 chachava street Military Base (vashlijvari) Digomi II kv. 5 Block Digomi Block V, I a Building 11 George Balanchini Street Agmashenebeli alley II km Agmashenebeli alley 9 km. Agmashenebeli alley Didi Digomi way. Digomi village way (vashlijvari) 8 Petritsi Street 7 Petritsi Street 10/12 Godziashvili Street Vashlijvari

ȱservices banking services Agmashenebeli alley 13 km 6 gelovani avenue 5 Lubliana Street Isani-Samgori Isani Samgori 1 Samgori 2 Varketili Varketili 3, IVm/r, near by 410 Building 1 Khomleli street 64 Javakheti street Vazisubani IV m/r I block, pete¿ str. Vazisubani IV m/r I block 2 Landia street 300 Aragveli Kakheti Highway 21km 60 Kakheti Highway Military Base (alekseevka) Military Base (alekseevka) AIR 3a Khomleti Street 10 Ketevan Tsamebuli Avenue 80 Ketevan Tsamebuli Avenue 51a Ketevan Tsamebuli Avenue 4 Kiziki Street Airport Airport Airport Military Base (vaziani2) 7 Kalaubani Street 7 Kalaubani Street 14 Kalaubani Street 39 Moscow Avenue 17 chichinadze street 44 Moscow Avenue 10 Telavi Street Avlabari Avlabari Metro Square 8/10 Chekhov Street 23 Shuamta Street 155 bogdan khmelnitski street 6/4 Naftlukhi Street Atskuri, isnis metros mimdebare Kairo & Javakheti Street 64 Melaani Street 1 Abdushelishvili street 122 Kakheti Highway market lilo 113 gakhokidze street 38 Kakheti Highway Krtsanisi 41 Gorgasali Street 39 Gorgasali Street Military Base (krtsanisi)2 Military Base (krtsanisi) 16 Gorgasali Street 16 Gorgasali Street 6 Gorgasali Street 77 Gorgasali Street 117 Gorgasali Street 37 Gorgasali Street 19/2 Rustavi Highway 7 a krtsanisi street 10 Gulua Street Kodjori military base Mtskheta 23 arsukidze street Bebriscixis mimdebared 12 samxedro street

BANK REPUBLIC TBILISI BRANCHES AND SERVICE CENTERS Head OfÀce and Central Branch 2 Gr. Abashidze St. Tel: (995 32) 292.55.55 Fax: (995 32) 292.55.44 Vake 13 Chavchavadze Ave. (24 hour) 33a Paliashvili St. Freedom Square 2, Leonidze St. Airport International Airport (24 hour) 24 hours, except Christmas and Easter Didube 10 Building, Tsereteli Ave. Sadguri 10, Tamar Mephe Ave. Sadguri Near the Railway Station Sanzona 34 Guramishvili Ave. Nadzaladevi 34 Dadiani Ave. Saburtalo 28 Pekini Ave. 71 Vazha-Pshavela Ave. 47 A. Kazbegi Ave. Isani 6/2 Navtlughi St. Gldani 20 Khizanishvili St. Mukhiani 8b Block, IVa micro district Iashvili Clinic 2/6 Lubliana St. Police Of¿ce 8 Gulua St. Dighomi 1b Block, 1 micro district, Dighomi Building of City Court of Tbilisi David Aghmashenebeli Alley VI km. Ortachala 37 Gorgasali St. Varketili Aerodrome Settlement. St N 29-31

ATM Tbilisi Vake 2 Gr.Abashidze St. 13 Chavchavadze Ave. 33 A Paliashvili St. 1 Chavchavadze Ave. 49b Chavchavadze Ave. 50 Chavchavadze Ave. 2 Mosashvili St. Mrgvali Bagi 7 Kibshidze St. Mtatsminda 27 Kostava St. 32 Br/Zubalashvili St. 20 Rustaveli St. 10 Pushkini St. 8 Erekle II 2, Leonidze St. 4 – 9aprili St. 24 Gorgasali St. Ministry of Justice 24 Gorgasali St. General Of¿ce of Public Prosecutor 37 Gorgasali St. 8 Gulua St. Saburtalo 75 Kostava Ave. 16 Kazbegi Ave. 47 Kazbegi Ave. 2 Gamsakhurdia Ave. 23-25 Gamsakhurdia Ave. 28 Gamsakhurdia Ave. 45 Gamsakhurdia Ave. 6 Shartava St. 19 Nutsubidze St. 179 Nutsubidze St. 5 Sandro Euli St. Nutsubidze Plato 3rd , 5 Dzotsenidze St. 13 Bakhtrioni St. 11 Dolidze St. Building 4/5 34 Vaja Pshavela Ave. Vaja Pshavela Ave. 48 Vaja Pshavela Ave. 71 Vaja Pshavela Ave. 72 Vaja Pshavela Ave. Building 1, Block of Àats 7, Vaja Pshavela Ave. Kavtaradze St. Digomi 1st Block, 1 Micro District, Dighomi Masivi 9 Mikeladze St. 3rd Block, Dighomi Masivi Aghmashenebeli alley 6 th km. Aghmashenebeli alley 2/6 Lubliana St. 5 Lubliana St. 13 Petritse St. Didi Digomi Didube-Chugureti 1 Khetagurovi St. 2 Tsereteli Ave. Tsereteli Ave. Building 10 67 a Tsereteli Ave. 144 Tsereteli Ave. 10 Tamar Mephe Ave. Near Railway Station

44 Aghmashenebeli Ave. 4 Chubinashvili St. 19 Vakhtang Bagrationi Ave. 19 Tsabadze St. Isani-Samgori International Airport of Tbilisi, „Sakaeronavigatsia“ International Airport of Tbilisi, Airport Service Center Kakheti highway 112 Kakheti highway 6/2 Navtlughi St. 23 “Ghvinis Aghmarti” Varketili Subway Territory 7 Varketili, Kaloubnis St. 9 Tsinandali St. 91 Ketevan Tsamebuli Ave. Opposite side 2 Ketevan Tsamebuli square 44 Moscow Ave. Vazisubani III Mik. II Block #15 Gldani-Nadzaladevi 34 Dadiani St. 39 Dadiani St. 263 Dadiani St. 20 Khizanishvili St. Mukhiani 2nd , Block #5 (Noneshvili St.) Mukhiani, Building 8, 4a m/d Temka District, Building 10, 2 m/d, Block of Àats: 25 34 Guramishvili Ave. 36 Guramishvili Ave. Subway Sadguri, Akhmeteli Theatre Territory

VTB BANK Tbilisi 37, Uznadze Str. 14, Chanturia Str. 5, Jikia Str. 3, Gotua Str. 6, Gorgasali Str. 16/18, Rustaveli Ave. 54, Chavchavadze Ave. 10, Chavchavadze Ave. 21, Vazha Pshavela Ave. I tr. 33, Kostava Ave. 16/18, Tamar Mepe Ave. 4, Leselidze Str. 15, Tamar Mepe Ave. 76, Tsereteli Ave. 3, Vani Ave. 147, D. Aghmashebeli Ave. 5, Khizanishvili Str. 12, Ketevan Tsamebuli Ave. 20, Telavi Str. 42, Al. Kazbegi Ave. 8, Tsabadze Str. 6/2, Navtlughi Str. 9, Tsinandali Str. 48a, Bogdan Khmelnitsky Str. 19, Gamrekeli Str. 143, Tsereteli Ave. 78, Nutsubidze Str. Aghmashenebeli Alley 60, Barnov Str.

KSB BANK TBILISI BRANCHES Vake (09.30-21.00) 43, Chavchavadze ave. Avlabari 3, Ketevan Tsamebuli str. Vera 8/2, Melikishvili str. Didube 60, Tsereteli ave. Agmashenebeli 147, Agmashenebeli ave. Varketili 7, Kaloubani str. Krtsanisi 37, Gorgasali str. Pekini (09.30-20.30) 24a, Pekini ave. Didi Digomi 8, Ioane Petritse str. Gldani 15, Khizanishvili str. Freedom sq. branch (24 hour) 4, Freedom sq. Service centre - Gudushauri hospital (24 hour) 18/20, Lubliana str.

ATM’S TBILISI Vake – branch 43, Chavchavadze ave. Vake - Fashion house 24, Chavchavadze ave. Avlabari - branch 3, Ketevan Tsamebuli str. Vera - branch 8/2, Melikishvili str. Didube - branch 60, Tsereteli ave. Agmashenebeli Avenue - branch 147, Agmashenebeli ave. Varketili - branch 7, Kaloubani str. Krtsanisi - branch 37, Gorgasali str. Pekini - branch 24a, Pekini ave. Didi Digomi - branch 8, Ioane Petritse str. Agmashenebeli Alley - Prosecutor 12 km, Agmashenebeli Alley Gudushauri Hospital 18/20, Lubliana str. Gldani - branch 15, Khizanishvili str. Freedom sq. - branch 4, Freedom sq. Publich Television 68, Kostava ave. Public Service Hall 2, Sanapiro str. Mtatsminda-Krtsanisi, Revenue Service 16, Gorgasali str. Mtatsminda-Krtsanisi, Revenue Service 4, General Gulua str. Georgian railway 15, Tamar Mepe ave. Trade center Panda 1, Tsereteli Ave. Agmashenebeli Avenue 96, Agmashenebeli ave. Old Tbilisi 5, Virsaladze str. Church store 67, Vazha-Pshavela ave. Book store 14, Vazha-Pshavela ave. Dighomi district 2nd block, building 6a. Airport customs clearance zone Old airport Lilo customs clearance zone Martkopi,Gardabani Region

LIBERTY BANK BRANCHES IN TBILISI Vake-Saburtalo Central Branch 74, I. Chavchavadze Ave. Central Branch’s s/c #1 2, Sanapiro St. Didi Dighomi s/c #1 9, I. Petritsi St. Pavilion #1 10-12, Vazha-Pshavla Ave. Pavilion #2 Kostava St. (Near Sports Palace) Pavilion #4 33-35, I. Tchavtchavadze St. (Near Hospital 9) Pavilion #9 48-66, Vazha-Pshavela Ave. Pavilion 13 13 Km. Aghmashenebeli Highway Saburtalo s/c #1 34, Pekini St. Saburtalo s/c #2 7, Shartava St. Saburtalo s/c #7 2g, B. Zhgenti St. (Nutsubidze District) Saburtalo s/c #8 6, Budapeshti St. Saburtalo s/c #9 5, Kavtaradze St. Saburtalo s/c #11 10 Km. Aghmashenebeli Highway Sopeli Dighomi s/c #1 Village Dighomi, B. 7b Saburtalo s/c #15 2, Gamsakhurdia St. s/c #332 70, Tchavtchavadze Ave. Saburtalo s/c #13 3, Micro-District Nutsubidze Saburtalo s/c #14 46, Dolidze St. / 41,

Balanchivadze St. Tskneti s/c #1 3a, Rustaveli St. Vake-Saburtalo Branch 2, Marijani St. Vake s/c #2 1, Mosashvili St. Vake s/c #3 84, Tchavtchavadze Ave. (National Agency Bureau) Vake s/c #4 38, Paliashvili St. Vake s/c #12 14, Kipshidze St. Mtatsminda-Krtsanisi Krtsanisi s/c #1 10, Kikodze St. Krtsanisi s/c #2 2a, Sanapiro St. Mtatsminda-Krtsanisi Branch 37, Gorgasali St. Mtatsminda s/c #1 24, Kostava St. Mtatsminda s/c #4 3, Kostava St. Turn 2 Ponitchala s/c #1 19, Rustavi Road, B. 4 Ponitchala s/c #2 3, Micro-District Ponichala, B. 2 Didube-Chughureti Chughureti s/c #2 153, Aghmashenebeli Ave. Chughureti s/c #3 3, Abashidze St. Chughureti s/c #4 21, Chitaia St. Digomi s/c #2 7, Robakidze St. Didube Branch 126, Tsereteli Ave. Didube s/c #1 60, Tsereteli Ave. Pavilion #5 A. Tsereteli St. (near Tsereteli Underground) Pavilion #10 Dighomi (Near Mayakovsky Monument) Pavilion #15 Didube (near the railway square) Gldani-Nadzaladevi Avtchala s/c #1 1, Libani St. Avtchala s/c #2 7, Libani St. Avtchala s/c #3 5, Sarajishvili Ave. Gldani Branch 3, Block Gldani Gldani s/c #2 Mukhiani (Near Akhmeteli Subway Station) Gldani s/c #4 3, Block Gldani, B. 86 Gldani s/c #5 7, Micro-District Gldani (Prison Gldani) Gldani s/c #6 2, Botchorishvili St. Gldani s/c #7 6, Micro-District Gldani, 11 Tiulenevi St. Gldani s/c #9 8, Micro-District Gldani, B. 23 Gldani s/c #10 2, Micro-District Gldani, B. 24b Gldanula s/c #1 Gldani Khevi (Ravine), Near B. 6a Gldani s/c #11 18, Gombori St. Lotkini s/c #1 164, Tseronisi St. Mukhiani s/c #2 2, Micro-District Mukhiani, B. 5 Mukhiani s/c #3 3, Micro-District Mukhiani, B. 5 Nadzaladevi Branch 36, Guramishvili Ave. Nadzaladevi s/c #1 34, Dadiani St. Nadzaladevi s/c #3 261, Dadiani St. Nadzaladevi s/c #4 12a, Guramishvili Ave. Nadzaladevi s/c #6 30, Guramishvili Ave. B. 1 Temka s/c #1 11, Micro-District Temka, Block 1 Temka s/c #2 3, Micro-District Temka, Block 3, Near B. 41 Zahesi s/c #1 1a, Tchitchinadze St. Isani-Samgori Afrika s/c #1 27, Tchitchinadze St. Afrika s/c #2 17, Tchitchinadze St. Isani-Samgori Branch Kakheti Alley 2 Isani s/c #1 51/2, Ketevan Tsamebuli Ave. Isani s/c #4 22, Metekhi St. Isani s/c #6 30 Km. Kakheti Highway Isani s/c #7 Moscow Ave, Block 2, B. 1 Isani s/c #9 90, Ketevan Tsamebuli Ave. Lilo s/c #1 Lilo Settlement, Block 2, B. 8 Pavilion #6 4, Abzianidze St., Orkhevi Settlement (Near Customs Department) Pavilion #8 10 b, Airport Settlement Pavilion #11 103, Kvareli St.(Metromsheni Settlement) Pavilion #12 10, Akhalubani St. Ponitchala s/c #3 Rustavi highway, KM 30 Samgori s/c #1 37, Moskovi Ave. Samgori s/c #2 36a, Trialeti St. Samgori s/c #4 151, Bogdan Khmelnitski St. Varketili s/c #1 Javakheti St. Second BlindAlley (Near Varketili Subway Station) Varketili s/c #2 3, Micro-District Varketili, B. 310 Varketili s/c #3 Varketili Block 10, B. g Varketili s/c #5 Tbilisi International Airport Varketili s/c #6 3, Micro-District Varketili Varketili s/c #7 12, Shuamta St. Varketili s/c #9 1, Micro-district varketili 3, Near B. 25 Varketili s/c #10 Kaloubani St. 9 Vazisubani s/c #1 4 Micro-District Vazisubani 1B,Shandor Peto¿ St. Vazisubani s/c #2 2, Micro-District Vazisubani (Super Market “Smart”) Vazisubani s/c #3 1, Shandor Peto¿ St Didgori Didgori s/c #1 97, Block Tabakhmela, plot 516

ATM’S IN TBILISI 1, Aleksidze St. Agmashenebeli Alley, KM 11. 10a, Akhmeteli St. 13, Bakhtrioni St. 6, Budapeshti St. Zhvania Square 2, Gamsakhurdia Avenue 2/4, Godziashvili St. Block 3, Didi Dighomi Building 11, Dolidze St. 1, Vazha-Pshavela Avenue 10-12, Vazha-Pshavela Avenue 27, Vazha-Pshavela Avenue (near subway station “Sameditsino”) 76b, Vazha-Pshavela Avenue Block 2, Vazha-Pshavela Avenue (near Vazha-Pshavela monument) 46-48, Vazha-Pshavela Avenue (near metro station “Delisi”) 55, Vazha-Pshavela Avenue Block 7, Vazha-Pshavela Avenue Vashlijvari highway 10a, Tamarashvili St. 15a, Tamarashvili St. Kostava St. (near the Sports Palace) 24, Kostava St. 64, Kostava St. Marshal Gelovani Avenue 10, Mitskevitchi St. Nodar Bokhua St. 183, Nutsubidze St. (II-IV plateau turn) III m/d, Nutsubidze plateau 14, Gamsakhurdia St. 15, Gamsakhurdia Avenue 34, G a m s a k h u r d i a ave. 9, I. Petritsi St. 28, Saburtalo St. 2, University St. 36, Phaliashvili St. 5, Kavtaradze St. 21, Kavtaradze St. 2, Kazbegi Avenue 15, Kazbegi Avenue. Kazbegi Avenue (near the school #60) 26, Kazbegi Avenue (Vake-Saburtalo crossroads) 7, Shartava St. Block 1, IV m/d, shandor Peto¿ St. 10, Tchavtchavadze St. 34, Tchavtchavadze St. 74, Tchavtchavadze Avenue Tchavtchavadze Avenue (near to Hospital No. 9) 84, Tchavtchavadze Avenue (Legal expertise) Tchavtchavadze Avenue (near to school #55) Didube-Chugureti 96, Aghmashenebeli Avenue 153, Aghmashenebeli Avenue 10th km, Aghmashenebeli Alley 1, Beliashvili St. Dighomi, near to Mayakovsky monument Tevdore Mghvdeli St. (near to the Railway Station) 27, KingTamarAvenue 7, Robakidze St. 8, Tsabadze St. 2, Tsereteli Avenue Tsereteli Avenue (nearto subway station “Tsereteli”) 126, Tsereteli Avenue 143, Tsereteli Avenue 144, Tsereteli Avenue 69, Tsereteli Avenue (corner of Vani St.) 7-7a-7b, Tsereteli Avenue 60, Tsereteli Avenue 5/12, Ketevan Tsamebuli Avenue 39, Chitaia St. 17, Tc hitchinadze St. Gldani-Nadzaladevi

2, Botchorishvili St. Gldani, M/D 3. Gldani, M/D 3, Building 86, Near to building 22, Gldani M/D 6 Gldani, M/D 7 (Gldani prison # 8) 12a, Guramishvili Avenue 36, Guramishvili Avenue Guramishvili Avenue (near the subway station “Grmagele”) Guramishvili Avenue (near the subway station “Sarajishvili”) 34, Dadiani St. 34, Dadiani St. 261, Dadiani St. Building 2, 2nd m/d, Dadiani St. 22, Dumbadze St. (Mukhiani settlement) 1a, Chichinadze St., ZAHESI, near the building 41, block 3, 3rd m/d, Temka near maternity house No. 5, block 1, 11th m/d, Temka Kakheti 2nd turn 1, Liban St. Mukhiani turn near the subway station “Akhmeteli” 1, Sarajishvili St. 8, Kerchi St. 146, Tseronisi St. 4, Khetagurov St. 6, Khizanishvili St. Isani-Samgori 1, Abdushelishvili St. Airport settlement 10, Akhalubani St. 151, Bohdan Khmelnytsky St. 6, Gulia St. Building C, block 10, 3rd massif, Varketili Building 310, 3rd m/d, Varketili 3 Tbilisi International Airport Kakheti highway KM 38. 112, Kakheti highway 37, Moscow Avenue 8, Navtlughi St. Orkhevi settlement (near to Customs Department) Saknavti settlement (Kakheti highway) Building 8, block 2, Saksopmankana settlement 103, Kvareli St. (Metromsheni settlement) 22, Javakheti St. Javakheti St. Second turn Mtatsminda-Krtsanisi 23, A. Tchavtchavadze St. 37, Vakhtang Gorgasali St. 93, Vakhtang Gorgasali St. 155, Vakhtang Gorgasali St. 48, Zubalashvili St. 1, Leonidze St. 10, Leonidze St. 22, Metekhi St. 9, Pushkini St. 3, Rustaveli Avenue 2a, Sanapiro St. 10, Kikodze St. 5, Chachava St. 37/4, Tsintsadze St. Ponitchala Rustavi highway, KM 30 Building 2, 3rd m/d, Ponichala settlement Old Tbilisi 12, Kaloubani St. Didgori Plot 516, block 97, village Shindisi, Didgori

ATM’S IN REGIONS Abasha 6, Jorjikia St. Adigeni 24, Tornike Eristavi St. Ambrolauri 18, Agmashenebeli St. Settlement Anaklia Aspindza 31, Vardzia St. Akhalkalaki 82, KingTamar Avenue 11, Charenta St. 71, Tavisupleba St. Akhaltsikhe 1, Tamarashvili St. 98, Rustaveli St. 11, KingTamar St. 2, Shalva Akhaltsikheli St. 1, Kharischirashvili St. 6, Iadze St. Akhmeta 2, Kazgebi St. Batumi 63, Gorgiladze St. 2, Sulkhan-Saba St. 46-48, Vazha-Pshavela Avenue Khimshiashvili St. 11, Tbel Abuseridze St. 80, Javakhishvili St. 11, Pirosmani St. 10-12, Chavchavadze St. 20a, Agmashenebeli Avenue 9, King Parnavaz St. 62-64-66, King parnavaz St. 36, Gorgiladze St. 20, Khimshiashvili St. 102, Melikishvili St. 11/5, KingTamar settlement 75, Chavchavadze St. 16, Tavdadebuli St. 23, Mayakovski St. Baghdati 12, Tsereteli St. Bolnisi Settlement Kazreti 106, Sulkhan-Saba St. 107, Sulkhan-Saba St. Borjomi 7, Meskhishvili St. 147, Rustaveli St. 6, Tavisupleba St. Gardabani 71, David Agmashenebeli St. 89, David Agmashenebeli St. Gori 16, Stalini St. 40, Sukhiahsvili St. 56, Chavchavadze St. 26, Stalini St. 5, Guramishvili St. 43, Ertoba St. 39, Stalini St. Gudauri Hotel “Marco Polo” Gurjaani 10, Noneshvili St. KingTamar St. Village Shashiani Dedoplistskaro 1, Alazani St. 23, Rustaveli St. Dmanisi 41, St. Nino Street (Municipality) 29, Street St. Nino blind alley Dusheti 21, Dadiani St. 27, Rustaveli St. Vani 3, Solomon II St. Zestaponi 61, Agmashenebeli Avenue 11, Tsereteli St. Village Shorapani Zugdidi 45, Gamsakhurdia St. 90, Rustaveli St. 73, Sokhumi St. 7, Paris Commune St. 32, Gamsakhurdia St. 15, Tsotne Dadiani St. Tetritskaro 12, Kingtamar Avenue Telavi 43, Alazani Avenue 95, Alazani Avenue 16, Erekle the Second St. 3, Erekle the Second Square 12, Erekle the Second St. Terjola 2, Chanturidze St. Tianeti 11, Rustaveli St. Kaspi 88, Stalini St. 11, Rustaveli St. 18, Kostava St. Koda, village house Lagodekhi 23, Kiziki St. Lanchkhuti 10, Ninoshvili St. 24 Kingtamar St., Settlement Lentekhi Village house in settlement Manglisi Village Nigoeti

Marneuli 1, Rustaveli St. 72, Rustaveli St. 73, Rustaveli St. Martvili 14, Tavisupleba St. Mestia 52, Kingtamar St. 1, Seti St. Mtskheta Building of regional governor ’s of¿ce 17, Kostava St. (near to the Svetitskhoveli Cathedral) 11a, Samkhedro St. Mtskheta highway 73a, Agmashenebeli St. 65, Mamulashvili St. Village Tserovani Ninotsminda 22, Tavisupleba square Ozurgeti 5, Gabriel the episcope St. Village Ozurgeti Tavisupleba Square Oni 16, Rustaveli St. Rustavi 21, Kostava St., near to the Municipality 14, Kostrava St. Megobroba Avenue 3, Megobroba Avenue 11, Megobroba Avenue 21st km, Red Bridge Highway 5, Tashkent St. Village Sartichala Sagarejo 2, Agmashenebeli Avenue Samtredia 11, Stalini St. Sachkhere 92, Kostava St. 17, Gomarteli St. Senaki 14, St. Nino St. 20, Ninoshvili St. Signagi 2, Rustaveli St. 2, Dadiani St. 18, Gelati St. Poti 12, D. Agmashenebeli St. 146, Chavchavadze St. 57, Agmashenebeli St. Village Poka Kareli 3, Ninoshvili St. 1, Mgaloblishvili St. Settlement Ruisi Keda 11, Tbel Abuseridze St. 1, M. Kostava St. Kobuleti 153, Agmashenebeli St. 4, Memed Abashidze St. 141, Agmashenebeli St. 478, Agmashenebeli St. 79, Kingtamar St., Village Chakvi

PASHA BANK

+995 322 265 000 15, Rustaveli Avenue, Tbilisi, 0108 , Georgia of¿ce@pashabank.ge www.pashabank.ge

CARTU BANK Head Of¿ce 39a Chavchavadze Ave. Tbilisi 0162, Georgia Tel: (+995 32) 292 55 92 Fax: (+995 32) 291 22 79 E-Mail: info@cartubank.ge Central Service Center 39a Chavchavadze Ave. Mtatsminda Service Center 1 Vekua St. Vake Service Center 24 I. Abashidze St. Saburtalo Service Center 14b Pekini St. Isani Service Center 50/18 Queen Ketevan Ave./Bochorma St. Kutaisi Service Center 4 Paliashvili St., Kutaisi Batumi Service Center 2 Griboedov St., Batumi Gori Service Center 10 Stalin Ave., Gori Telavi Service Center Chavchavadze Square, Telavi

ATM’S IN TBILISI Vake 39a I. Chavchavadze Ave., Cartu Bank, Head Of¿ce 39a I. Chavchavadze Ave., Cartu Group 24 I. Abashidze st., Cartu Bank, Vake Service Center 54 I. Chavchavadze Ave., PSP Pharmacy Mtatsminda 1 V. Vekua St., Cartu Bank, Mtatsminda Service Center 3 V. Vekua St., Georgian Trade Center 17 Sh. Rustaveli Ave., Sh. Rustaveli Theatre 10 G. Chanturia St., Hotel “Tori” 29 P. Melikishvili Ave. 34 M. Kostava St., Laguna Vere Old Tbilisi 44 K. Apkhazi St. (former Leselidze St.) 6 Kodjori highway, GDS TV Ortachala 79 Gorgasali St., Super Market 12 Krtsanisi St., New Hospital Saburtalo 14b K. Gamsakhurdia St., Cartu Bank, Saburtalo Service Center 5 K. Gamsakhurdia St., Kuzanov Clinic 48 Vazha-Pshavela Ave., PSP Pharmacy 71 Vazha-Pshavela Ave., close to VazhaPshavela Metro station 29 Vazha-Pshavela Ave., Central Clinic of Acad. N. Kipshidze L. Gotua St., Saakadze sq. Good Year Store 10 Al. Kazbegi Ave., M.B.J. 24 Al.Kazbegi Ave., Axis Trade Center Vashlijvari, “Omega” 8 A. Beliashvili St., Maestro TV Didube-Chughureti Vagzali Sq. Trade Center “Tbilisi Central” Trade Center “Passage” 8 A. Tsereteli Ave. PSP Pharmacy 128 A. Tsereteli Ave. PSP Pharmacy 89/24 D. Agmashenebeli Ave. “Global TV” 99/1 D. Agmashenebli Ave., N. Dumbadze theatre 154 D. Agmashenebeli Ave. Danish House 31 Queen Tamar Ave. PSP Pharmacy 7 Ts. Dadiani St.,Trade Center “Karvasla” 39 Ts. Dadiani St., Super Market Isani-Samgori 50/18 Queen Ketevan Ave./Bochorma St. Cartu Bank, Isani Service Center 42 Bogdan Khmelnitski St., Elita Burji Javakheti St., close to Varketili Metro station Isani “Bazroba”, Gun Store 6/2 Navtlugi St. Currency Exchange Point 91 Queen Ketevan St., PSP Pharmacy 12 Meskhishvili St., PSP Pharmacy Gldani-Nadzaladevi Gldani, A Housing Development, Building 50, PSP Pharmacy 5 D. Sarajishvili St., Avchala Temka, Avshniani Settlement (close toTemkaMukhiani Crossroad) 4a Mukhiani Housing Development, Building 14, Super Market “Ori Nabiji” Rustavi Auto Market (Exam Center Building) Kutaisi 4 Z. Paliashvili St., Cartu Bank, Kutaisi Service Center 26 I. Abashidze St., Parliament of Georgia 5 I. Chavchavadze St., “Orgservice” Kutaisi International Airport of D. Agmashenebeli 11 Queen Tamar St., Sachkhere, ATM ʋ 1 11 Queen Tamar St., Sachkhere, ATM ʋ 2 Batumi 2 A. Griboedov St., Cartu Bank, Batumi Service Center 4 V. Maiakovski St. close to Batumi Oil Terminal 44 K. Gamsakhurdia St. 12 M. Abashidze St. Hotel “Alik” Park “Cicinatela”, village Shekvetili Gori 10 Stalini Ave., Cartu Bank, Gori Service Center Telavi I. Chavchavadze sq., Cartu Bank, Telavi Service Center 60 D. Agmashenebeli St., Super Market “Real”

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HEADLINE NEWS & ANALYSIS 27 JUNE, 2016 | FINCHANNEL.COM

Advertiser: The FINANCIAL. Contact FINANCIAL Ad Dep at marketing@finchannel.com

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HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 27 JUNE, 2016

| places we strongly reccommend to visit | LITERATURULI CAFÉ

dining

Red Café Bistro & Cafe

4, Besiki Str. 22, Abashidze Str. Tel: 222 02 76

Tel: 2 519 966 Literary cafe “MONSIEUR JORDAN” V. Gorgasali st.,17 Tel.: 275-02-07

Respublika Grill Bar

# 71 Vazhaphavela Ave. Tel: 2201 211 info@redcafe.ge

PREGO

PICASSO

84, Barnovi Str. Tel: 225 22 58 15, Erekle II. Tel: 293 14 11 19 Pavle Ingorokva str. Tbilisi +995 555 004151 https://www.facebook.com/RespublikaGrillBar/

DISCOVERY

SIANG-GAN

41, Gamsakhurdia Str. Tel: 237 96 88

2, MarjaniSvili Str. Tel: 2 999 723

4, Vashlovani Str. Tel: 298 90 86

/24

40, Chavchavadze Ave. Tel: 229 42 30

ENGLISH TEE HOUSE

Book Corner

13b, Tarkhnishvili Str. Tel: 223 24 30 contact@bookcorner.ge

1. 7 Sandro Euli St. Tel.595 99 22 77 hello@stradacafe.ge Each Day 10:00 – 01:00 2.#5 Marjanishvili Str. 595 99 22 88

Tbilisi 13 Taktakishvili Street, Tel.: (+995 595) 90 71 80 19 Petriashvili Street, Tel.: (+995 595) 33 82 10 7 Pekini Street, Tel.: (+995 591) 19 39 68 78 Chavchavadze Avenue (Bagebi), Tel.: (+995 599) 09 56 70;47 Kote Apkhazi Str (Leselidze), Tel.: (+995 599) 095670 12 Amaghleba street (Sololaki), Tel.: (+995 599) 08 34 53 1 Ateni Street, Tel.: (+995 591) 70 90 22 25 Gagarini street, Tel.: (+995 591) 19 39 68 24A Pekini street, Tel.: (+995 591) 96 19 90 Baku, Azerbaijan Nigar Refibeily #26G, Tel.: (+994 55) 505-95-92 Dilara Aliyeva #220, Tel.: (+994 55) 505-95-91 B. Sardarov Street #10, Tel.: (+994 55) 505-95-93

Tel.: 599 21 53 83

CAFE CINEMA 5, Marjanishvili Str. Tel: 294 16 20

MEPETUBANI

Addr: 3 Vekua Street. (Trade Center GTC) Tel.: 2 93 61 38

For advertising please contact: 577 741 700

Addr: 3 Erekle II square Tel: +995 598 77 09 68

marketing@finchannel.com

For advertising please contact: 577 741 700 marketing@finchannel.com

Prospero’s Books

34, Rustaveli Ave. Tel: (+995 32) 2923 592

BUSINESSTRAVELCOM HOTEL AND AIRTICKET BOOKING: 2 999 662 | SKY.GE

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HEADLINE NEWS & ANALYSIS 27 JUNE, 2016 | FINCHANNEL.COM

Advertiser: Heidelberg Cement. Contact FINANCIAL Ad Dep at marketing@finchannel.com