URBAN Tbilisi 2018 by The FINANCIAL

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5 November, 2018

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“We have a clear vision of how to develop the city”

“All of our projects are built WintekPro with energy efficient materials”, has introduced self-cleaning Zurab Mekvabishvili, Co-Founder and windows on CEO of SEU Development Georgian Eva BOKVADZE that the city’s heritage from Interview with Kakha Kaladze, Mayor of Tbilisi the Soviet Union is inadThe FINANCIAL equate and does not fall into Market Interview with Givi Beridze, Partner at Wintekpro and CEO & CoFounder of Edison The FINANCIAL

intekPro is a company oriented on developing hitech products, such as their multi- functional self-cleaning window. Its vision is to disrupt this industry using innovative technologies. The FINANCIAL talked to Givi Beridze, the Partner at Wintekpro and CEO & Co-Founder of Edison, which is the company’s technical team. Continued on p. 15

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Nov 3

Oct 27

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2.6986 3.0632 4.1018 0.4800

The FINANCIAL

rban planning is a much-needed discipline in today’s world. Its purpose is to find solutions for the use of land and public domains, environmental protection, infrastructure

and many other segments which make a city functional and operational. With constant warnings about global climate change and environmental catastrophes, urban planning has become one of the most important fields for the creation of a safe and efficient way of life.

In his interview with The FINANCIAL, Mayor of Tbilisi Kakha Kaladze talks about Tbilisi as a city of the future, its development plans as well as expectations of what the city will look like in a few years’ time.

Continued on p. 3

“We offer customers a concept that will make their lives more interesting and dynamic” Interview with Shorena Darchiashvili, Deputy Director of m2 The FINANCIAL Q. What are some of the new technologies you have started using for your projects? A. Here we can mention Kazbegi 2’s project which was constructed using completely new technologies, including a modern façade and sound

insulation systems. We invited an external company to test the quality of the soundproofing in real life and they got good results. We compared the noise coeﬃcient between flats and rooms and compared them to the Finnish standard (which is considered one of the highest in Europe). We ended up getting a 5 decibels high result. The façade itself is diﬀer-

ent, aquapanel and gypsum boards are built around a metal frames, which protects the building from noise, while the sandwich creates an ideal package providing both energy eﬃciency as well as sound isolation - ensuring that the noise of the city does not reach inside the apartment at all. Continued on p. 4

Q. What do you think of the condition of Tbilisi’s architecture? A. First of all, I would say

the category of the historical development of Tbilisi.

Continued on p. 6

A. Almost everyone in Georgia complains about how much they have to pay for their utility expenses and yet aren’t doing anything to find a way out. Continued on p. 8

City within the City Interview with Beso Jikurauli, General Director of AS Georgia-Dirsi The FINANCIAL

he company “AS Group Investment” has been operating in the construction industry for over 15

years. The company has launched up to 40 successful projects on both local and regional markets.

Continued on p. 10

HEADLINE NEWS & ANALYSIS 5 NOVEMBER, 2018 | FINCHANNEL.COM

urban tbilisi 2018 CURRENT PRICES ON GASOLINE AND DIESEL

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DISTRIBUTION The FINANCIAL distribution network covers 80 % of key companies operating in Georgia. 90 % is distributed in Tbilisi, Batumi and Poti. Newspaper delivered free of charge to more than 600 companies and their managers. To be included in the list please contact distribution department at: temuri@financial.ge

SAVE MORE IN TBILISI?!

SET’s Khachapuri Index continued an increasing trend in October 2018, which is very much in line with the annual seasonal trend. The average cost of cooking one standard Imeretian khachapuri currently stands at 3.59 GEL, which is 1.1% higher month-on-month (compared to September 2018), and 1.2% lower year-on-year (compared to October 2017). When comparing the average prices of khachapuri across cities, one can conclude that Tbilisi, the capital of Georgia, offers the lowest price. The average cost of a khachapuri there is 3.55 GEL, which is lower than the average prices in other cities. Moreover, looking at the minimum prices observed in every city shows that Tbilisi offers the greatest savings for those looking for the cheapest ingredients. Frugal people can save a solid 36.7% and pay just 2.60 GEL for one portion of khachapuri in Tbilisi if they invest time and effort into chasing the cheapest ingredients. Such a significant difference between the average and minimal prices in Tbilisi can be explained by the fact that Tbilisi’s markets are di-

versified and target diﬀerent segments of the population. Some markets are known for relatively low prices (for example, “Navtlughi” market), while others oﬀer higher prices to their customers. While the large number of sellers in Tbilisi drives average prices

down due to competition, the lack of coordination between sellers and the geographical distribution of markets allows them to charge different prices, resulting in a relatively large difference between the average and minimum prices offered in the capital.

As for other cities in Georgia, a frugal person would pay only 3.17 GEL in Telavi and 3.04 GEL in Kutaisi for one portion of khachapuri, saving 15.0% and 17.6% respectively. Batumi oﬀers fewer bargains compared to other cities, as people can only save 10.1% there.

CONTACT US EDITOR-IN-CHIEF ZVIAD POCHKHUA E-MAIL: editor@financial.ge editor@finchannel.com Phone: (+995 32) 2 252 275 HEAD OF MARKETING LALI JAVAKHIA E-MAIL: marketing@financial.ge marketing@finchannel.com Phone: (+995 558) 03 03 03 CONSULTANT MAMUKA POCHKHUA E-MAIL: finance@financial.ge Phone: (+995 599) 29 60 40 HEAD OF DISTRIBUTION DEPARTMENT TEMUR TATISHVILI E-MAIL: temuri@financial.ge Phone: (+995 599) 64 77 76 COPY EDITOR: IONA MACLAREN COMMUNICATION MANAGER: EKA BERIDZE Phone: (+995 577) 57 57 89 MAILING ADDRESS: 17 mtskheta Str. Tbilisi, Georgia OFFICE # 4 PHONE: (+995 32) 2 252 275 (+995 32) 2 477 549 FAX: (+95 32) 2 252 276 E-mail: info@finchannel.com on the web: www.financial.ge daily news: www.finchannel.com

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Is Russia Back as the Main Foreign Provider of Electricity to the Georgian Market? By MARIAM LOBJANIDZE1,MARIAM TSULUKIDZE2 and NORBERTO PIGNATTI3

Figure 1. Georgian Imports (mln. kWh)

ISET

fter a generation deficit of August, Georgia continues to exhibit a decreasing trend in power generation; compared to August, total electricity generation has decreased by 14% in September 2018. Georgian power plants generated 849 mln. kWh of electricity, while consumption of electricity on the local market was 955 mln. kWh. It should be noted that compared to August, electricity consumption has decreased by 9%.Even though consumption decreased substantially during the month of September, Georgia had to import electricity from foreign power markets. Over the last 11 years, Georgia had four partners in electricity trading, namely Turkey, Armenia, Azerbaijan and Russia. However only two of them are the main electricity exporters to Georgia.

For years, Russia was the leading provider of electricity to the country. However, the situation changed in 2017, when imports from Azerbaijan outpaced those from Russia (Figure 1). This was good news for Georgians, who have had an unfavorable political relationship with their northern neighbors, as it was the first time since 2007 that Georgia managed to diversify its electricity imports and decrease the risk of energy dependence from Russia.

The trend continued in2018, when – most of the time – Azerbaijan maintained the largest share in total imports, with the exceptions of April and September. In April, 91% of imported electricity (11 mln kWh) came from Russia. In September, however, the share of electricity imported from Russia jumped to a whopping 97% of total imported electricity and, most importantly, grew substantially in absolute terms (139,46 mln kWh - 13.5 times more than

in April). It is also worth noting that the amount of total imported electricity in September increased by 40% compared to the previous month. The increase came all from Russia (+297% with respect to August), while the imports from Azerbaijan dropped by 93 %. (Figure 2). On a yearly basis, in September 2018 imports increased by 5% compared the same period of the Continued on p. 13

HEADLINE NEWS & ANALYSIS FINCHANNEL.COM | 5 NOVEMBER, 2018

urban tbilisi 2018

“We have a clear vision of how to develop the city” Interview with Kakha Kaladze, Mayor of Tbilisi Eva BOLKVADZE

The FINANCIAL

rban planning is a much-needed discipline in today’s world. Its purpose is to find solutions for the use of land and public domains, environmental protection, infrastructure and many other segments which make a city functional and operational. With constant warnings about global climate change and environmental catastrophes, urban planning has become one of the most important fields for the creation of a safe and eﬃcient way of life. In his interview with The FINANCIAL, Mayor of Tbilisi Kakha Kaladze talks about Tbilisi as a city of the future, its development plans as well as expectations of what the city will look like in a few years’ time.

Q. What are you planning to do economically, socially and politically, to make Tbilisi one of the top cities in the world? A. This is probably the dream of many different cities’ mayors around the world, but it is not easy to achieve. We have a small country with great potential and many challenges. My goal as the city’s Mayor is to overcome existing challenges and in parallel with this, step by step to open up Tbilisi’s potential. This concerns tourism and night life, economic activity, etc. Q. Can you elaborate on how ordinary Tbilisi citizens can help you realize your dream of a city where everyone enjoys a decent quality of life? A. The modern policy already takes into account the interests of citizens. We create such mechanisms for city management that are oriented on the one hand, on quality of services, and on the other hand, citizens’ engagement. That’s why we created the project “My idea to the Mayor of the city”, through which we have been recieving a lot of interesting, creative ideas about the development of the city. The success of each idea depends firstly on the recognition of citizens, and after the commission will consider the technical and financial side of the implementation of these ideas. If it does not oppose the law, and if we have sufficient funds for it and the conditions for its implementation, then the idea will become a reality. Furthermore, it is of great importance that every citizen adheres to the regulations that are good for the city, and as such I often reiterate that the efforts of each of us can and do change our living environment, create more comfort and harmony. Q. Good governance at any level requires the strong support of constituents. To get this support, what values, policies and virtues do you espouse in your own city and what pro-

KAKHA KALADZE

grammes do you have (or are planning to have) to apply them? A. That’s an interesting question. Yes, I agree with you. Firstly, obtaining support is crucial in order to realize important political decisions. This time last year, I was actively involved in pre-electoral campaigning: I met with the population every day, took on board detailed information, identified problems and did not tire of it. So I have kept going. I think the strongest side of self-governance should be this - feel the city’s pulse and be ready for any irregularities. What are the needs of this city and its inhabitants? First of all, a safe environment, really full of life. This motto is not just a motto. We need discipline; quality; harmony; greenness; cleanness; more beautiful facades and lighting; more interesting spaces for leisure; fun; more cultural innovations; diversity; the preservation of historic monuments; a healthy environment for everyone. Each of our decisions will draw us closer to these tasks and we know that it is the priority of each resident of Tbilisi. Q. What are your priority is-

sues and future plans for Tbilisi’s urban development? A. First of all is the consistent and identical development of all parts of the capital. For me it is a priority for each district to be developed at the same time so as not to lag behind the centre of the city. In addition, it is important that we have a multilateral approach to the issue of city development and are acting according to plan. Q. How would you describe Tbilisi as a city of tomorrow? A. After a few years, I want to see a city that has been able to rehabilitate, recover, and become re-filled with new life despite many damages. I envision Tbilisi as a city where citizens opt to use fast, safe and comfortable municipal transport, rather than their own vehicles; where traffic congestion is decreased as a result; where the damage caused by polluted air will decrease to a minimum; and where there will be more discipline, greenness, and most importantly - districts developed according to the correct urban viewpoint. How am I going to achieve this? That’s why I decided to become

Mayor. I believe that through the consistent application of policies elaborated by my team, and the strategic vision that primarily covers these directions, we will step by step get closer to this main goal. Q. What specific elements of the urban agenda are particularly important for Tbilisi and why? A. The most important tasks of urban politics are equal urban development, amendment of chaotic construction processes, and maintenance of the value and development of the historic part of the city. One of the main objectives of the renewed land use general plan was to reflect these issues and to set relevant regulations that ensured systemic and sustainable development of the city. Tbilisi is distinguished by its historical and cultural value, which has been formulated over the course of centuries. The city is characterized by its location and landscape, which in turn contributed to the city’s diverse urban development and the formation of mixed growth. Accordingly, each district needs its own specific city planning, but at the same time it is important to develop

according to a common complex view. Q. What role does business, especially big tech companies, have in the future of the city? A. Companies are gradually getting involved in the care of the capital. There are several facts that helped us to improve the parks and squares, as well as the city’s New Year decorations. As far as technological development is concerned, we do not have news in this direction, but I think private business is gradually aligning with the public sector to take care of the city. Q. Should Tbilisi authorities focus on improving public transport and reduce demand for private cars, or should they capitalize on expanding roads and highways? A. It is for this purpose that Georgia’s road safety strategy was designed which is coordinated by inter-agency commission. Tbilisi City Hall, specifically the Transport Department, is a key part of the commission. Today Tbilisi City Hall declares that the road and transport infrastructure of the capital should be developed in line with the experience of European cities. Priority should be given to the safe and comfortable movement of public transport, pedestrians and cyclists. By the end of 2020 Tbilisi City Hall plans to upgrade and increase its fleet of buses. This means that Tbilisi will have access to modern, safe buses, adapted for use by disabled people, not to mention ecological too – “Euro 6” standard public transport. In parallel, the Metro is also getting updated. City Hall is actively cooperating with European donors and experts in terms of road safety. For several months already, representatives of Mott MacDonald have been working with City Hall specialists to arrange public transport corridors and “bass lines”, which will provide not only comfort but also safety. In addition, a taxi system reform has been started. From October 2019, because of traﬃc safety and security, right-hand drive vehicles and those with only 3 doors will not be able to provide taxi services. Special attention is being paid to the idea of promoting bicycles as an ecological and healthy mode of transport in Tbilisi. According to the plan, during the development of road infrastructure, the design of bike lanes will be taken in to account as in the case of Pekini Avenue, Kostava and Shartava streets. In parallel, City Hall is working on the introduction of a zonal parking system, the pilot project of which will be launched in spring 2019. In areas where zonal parking is activated, the parking of cars on sidewalks will be completely prohibited. For car owners, as well as municipal parks there are plans to establish multi-storey parking lots through private investments. In conjunction with the implementation of City Hall Transport and Road Infrastructural Projects, the result should be that there is always a subway, public transport and a bicycle-friendly system. Owners of private cars must have the feeling that travelling by public transport, bicycle and by foot over short distances is much more comfortable than taking one’s own car. Q. What is the most suitable means of transportation for Tbilisi? A. In my opinion, it would be the subway, because one doesn’t get afContinued on p. 12

HEADLINE NEWS & ANALYSIS 5 NOVEMBER, 2018 | FINCHANNEL.COM

urban tbilisi 2018

“We offer customers a concept that will make their lives more interesting and dynamic” Interview with Shorena Darchiashvili, Deputy Director of m2

The FINANCIAL

hat has changed in the last year at m2? “The current year has been quite busy, because we are actively working on two important areas of residential development. First of all, there’s the completion of alreadystarted construction projects and the settling in of residents. This process started in the summer and is ongoing: it involves the final completion of apartments’ renovation works in preparation for being lived in. The second area is to work on new projects. In the fourth quarter we are waiting for the presentation of a new large district. This is a new concept and we want to offer our customers an absolutely new lifestyle, which will be oriented on outdoor activities. We are trying to bring people out of their homes and offer them a concept that will make their lives more interesting and dynamic. Different interesting and important projects are being implemented. Among them is a project of a 1000 room hotel network to be carried out within a 3 year period not only in Tbilisi, but in different regions of Georgia.

Q. What are some of the new technologies you have started using for your projects? A. Here we can mention m2 at Kazbegi 2’s project which was constructed using completely new technologies, including a modern façade and sound insulation systems. We invited an external company to test the quality of the soundproofing in real life and they got good results. We compared the noise coefficient between flats and rooms and compared them to the Finnish standard (which is considered one of the highest in Europe). We ended up getting a 5 decibels high result. The façade itself is different, aquapanel and gypsum boards are built around a metal frame, which protects the building from noise, while the sandwich creates an ideal package providing both energy efficiency as well as sound isolation - ensuring that the noise of the city does not reach inside the apartment at all. Q. What do you think about the architecture of Tbilisi? A. In my opinion it is very eclectic with old districts, post-Soviet elements, buildings of old constructivism and modern buildings. Recently it has become more diverse and fully saturated with different buildings.

SHORENA DARCHIASHVILI

IN GENERAL, ANY NOVELTY IN ARCHITECTURE HAS ALWAYS BEEN A SUBJECT OF DISPUTE AND DISSATISFACTION, AND IT IS SUCH ARCHITECTURAL DESIGNS THAT ULTIMATELY BECOME A CITY’S CALLING CARD. More structured architectural directions are perhaps desirable, and the city’s development plan should provide these. In general, any novelty in architecture has always been a subject of dispute and dissatisfaction, and it is such architectural designs that ultimately become a city’s calling card. So what seems new now might be considered trendy in the future. Q. What differentiates m2 from the rest of its competitors? A. Our main point is that we are trying to be one step ahead in terms of customers’ needs, to create services that are not yet in demand in Tbilisi and in Georgia. Initially, when we started offering renovated apartments, it wasn’t immediately popular. However, today the concept has become quite popular because it is considered comfortable due to all of the additional services that are provided along with the apartment itself. And it is now a challenge for us to finish constructions in the shortest time possible. Energy-efficient constructions were also very new, but now customers have felt that it’s not only good for the environment but also economical.

The systems that we are oﬀering, such as fire systems and water pumps, are also in demand and conventional, and in some cases connected to legislation. Fire safety norms, which we already had, were previously ignored in the legislation but are now strictly mandated. We’re constantly looking forward to innovation in order to create optimal living conditions for our customers. Q. What does your company do in regards of CSR? A. The greatest positive environmental impact of our products is that they are made using energy efficient construction. This is due to the fact that energy eﬃcient buildings consume less energy, less gas, which in turn reduces emissions and negative environmental impacts. We know that cars are one of the biggest contributors to air pollution. Consequently, it is the best prevention if society switches to electric cars. For this to be possible though it is very important that the infrastructure of a network of electrical chargers is in place. We believe that this is a very important investment in the direction of CSR and to that end we signed an agreement on the installation of equipment for up to

100 electric charging ports in Tbilisi and in diﬀerent regions. In the direction of planting, we are creating as much green space as the project and the area allows for. Of course this is a drop in the ocean and is not enough. The biggest project we have carried out, costing GEL 200,000, was a project of the fire-ravaged Mtatsminda hill which includes the maintenance, monitoring and irrigation of the plants there. 3000 trees were planted over 20 000 m2 as part of that project. I think this has proved to be a very important project for us as well as for the whole of Georgia. In the direction of CSR, we also pay much attention to adapting environments. Along with UNICEF and the Ministry of Health we have implemented the construction of a children’s home for those with disabilities. Investment in this project was half a million. Construction was completed in 2018 and by the end of November the children’s home will be oﬃcially opened. Construction of this project has been funded entirely by m2 and is fully adapted to the needs of the children. Q. How is the demand for housing changing? A. The demand is changing very

fast. However, as we look at it, this is based on the decisions we have made and oﬀered. Former demand was for the separated kitchen, and then a studio. Now the market is balanced, diversified. We are trying to make the demand tailored to the purpose and need of purchasing a home. Our new direction is m2 rent: a new service that includes the renting and selling of apartments. We also added a supervision and maintenance service. Such services are very highly demanded by our customers and we are pleased to see that modern customers are demanding a complete chain of service and experience where their involvement will be minimal. Q. How do see your role in the development of the city’s future? A. We see a clear role for us in this. But the development of the city in my mind cannot happen in just 1 or 2 years. This is a long-term process and such developer companies as m2, as well as Tbilisi City Hall, the municipality, or even just citizens, must jointly create the outward appearance and product of a city to ensure maximum living comfort. This goal must ultimately be achieved through joint work and cooperation.

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Advertiser: m2. Contact FINANCIAL Ad Dep at marketing@finchannel.com

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urban tbilisi 2018

“All of our projects are built with energy efficient materials”

Zurab Mekvabishvili, Co-Founder and CEO of SEU Development Eva BOKVADZE The FINANCIAL

Q. What do you think of the condition of Tbilisi’s architecture? A. First of all, I would say that the city’s heritage from the Soviet Union is inadequate and does not fall into the category of the historical development of Tbilisi. However, it is noteworthy that Tbilisi City Hall is very intensely involved in the resolution of the issue, which is reflected in its new regulations and initiatives. One such example are the problems with so-called “Khrushovka” flats, which are vitally important to solve to ensure improved living conditions as well as developing the outward appearance of the city. It is noteworthy that in terms of the abandoned constructions that we face today, it would be great if there were to be some steps taken in this direction, towards local selfgovernance and investors. Q. What differentiates SEU Development from the rest of its competitors? A. I would say that this is the quality of our company, the timing of completion and payment conditions that we offer to residents. 109 apartments have been sold at “Green Yard” within the space of just 4 months. This figure is exceptional for the Georgian market - it is a clear indicator of trust towards the company. After successful sales of the project in November, 2017, the company gained its first international recognition. It was awarded a prize by the Real Estate Forum & Project Awards, in the nomination of successful sales, held in Ukraine’s Eastern Europe Real Estate Forum. Q. Do you have any new projects in the pipeline? A. In one of the city’s suburb districts, we are working on a huge project that covers an area of 50,000 m2, which includes a recreational zone, accommodation/ office spaces, fitness spaces, and also a new direction - a school. Another interesting project we are working on is on Zubalashvilebi St. At this stage, there are ongoing works on the regulation of development, which will be completed very soon. We think that this will be one of the most important projects for our company. Q. How do you choose the location for a new project? A. Choosing the location is one of the most important and difficult phases. The first thing that

ZURAB MEKVABISHVILI

we consider is the demand. We are trying to maximally assimilate Tbilisi’s suburbs and make them grow. If we take into consideration the fact that the city has been very much saturated with buildings, we might plan for our next projects to be situated far away from urban noise and peripheral development. Q. How do you reconcile the issue of environmental protection with the process of Tbilisi’s urban development?

A. All of our projects are built with energy eﬃcient materials and our company is engaged in the implementation of new technologies. One of our priorities is to maintain the existing recreational zone and further develop and maximally try to avoid environmental pollution. Q. What do you consider to be the main problems aﬀecting your business today? A. We can say that the regulations that are being implemented today are creating some incon-

venience. However, despite that I would still say that it is very important that all companies operating in our business together with Tbilisi City Hall are involved in those regulations and initiatives which aim to bring in new investors. Q. How do you envision Tbilisi in the year 2020 and your role in its development? A. I’d go back to the first question, it’s crucial to improve the remnants we’ve been left from the

Soviet Union. The architectural part is as important as the visual side, as well as it being an architectural solution which will give us an even more beautiful city in 2020. Our involvement, of course, will be reflected in our projects, in the direction of development of recreational zones, even in energy eﬃciency directions. I think our involvement is very important if we want to achieve a better city by 2020 with better living conditions that will be available to all.

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) ) ) Advertiser: SEU Development. Contact FINANCIAL Ad Dep at marketing@finchannel.com

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MOSTAT – Wi-Fi Thermostat which Saves You Money Tata Kozmava, Founder of Alien Green, reveals the secret behind the first Georgian thermostat The FINANCIAL Q. What is the most widespread problem in Georgia, in terms of heating and electricity usage? A. Almost everyone in Georgia complains about how much they have to pay for their utility expenses and yet aren’t doing anything to find a way out. Most people think that in the case of a central heating system or electricity, if they control it manually it will be less expensive for them, but that is a mistake. They can’t get the result mechanically. This is the main problem nowadays. Everyone can see the problem but nobody knows how to solve it. Q. Let’s speak about the novelties that you offer your customers, what kind of guarantee do you provide in terms of saving energy? A. It’s a thermostat. A connection with your smart thermostat is achieved by means of internet connection, the same as a laptop or personal computer accesses the internet. This connection is used to directly access the controls of your HVAC system, and can set up programmable routines to regulate the temperature in your home. Smart thermostats can also compile various forms of data, to help homeowners achieve more effective, stable temperatures. In the case of offices we have had exceptionally good results. Expenses decrease by about 50%. We have the same result in homes as well. Q. Has the number of your customers increased? A. The number of our customers is increasing, but the challenge is that this is the very first gadget of its kind in Georgia. In Europe and in the USA they have already experienced and tested the gadget and are on another level of development. For us it is a problem, we don’t have any base from which to work, we are explaining and selling the product to customers at the same time. We have just started development. We launched the thermostat in December last year. Initially people at Saga stores started asking about such an instalment that would decrease their expenses. Some of those people were even involved in the product’s test regime. They trusted us and gave us useful and positive feedback. Q. What are the advantages of your product in accordance with worldwide analogues? A. Our advantage is that our product is produced for Georgian Market, the application language is Georgian, it’s suitable with heating boilers that are presented on the market, we have customer service which works 24/7, the price of our products was customized and accessible. Our thermostat doesn’t have a screen but we don’t need source of power. You can double check where the best place for installing it is, and install it where you want. The process is very easy and takes just 15 minutes. The thermostat’s source of power is a battery. In case of a change of temperature we receive a notification. The product was specially created for Georgia and its neighbouring countries’ conditions. The point is, customers have understood how important an investment it is to buy such a thermostat. We have a 2 year down payment option. The cost of the thermostat is GEL 349. It doesn’t make sense to install the thermostat in a small area. We have changed many clients’ minds due to this exact reason.

TATA KOZMAVA

We don’t live for today and are planning to go forward, we care about our customers and are loyal to them. Q. Due to its high price, are you planning to provide an instalment service as well? A. We have already added an instalment service and started working on a new product which will cost less. We are positioning ourselves as a green company and green technology producer. We can understand that the number one goal for people is to save money but it’s very important how they are spending the resources they have. Also we should acknowledge that simply planting a tree is not caring about the environment. The world has gone so far on this current issue that we must keep up with them in terms of this tendency. Q. Where can one buy the product? A. Our product is available at our website Mostat.ge, at Saga, Bricorama, and we will be entering other diﬀerent companies too. Quite often customers don’t realize what a thermostat is. We are arranging supply and demand at the same time. We are creating demand due to the fact that many people complain about utility expenses and don’t want to find a way out. For awareness and PR we use social networks. We are planning a green campaign to increase the knowledge and make them believe that you can save expenses by doing just one small thing. Q. How do you plan to develop the business Alien Green? A. Our mission is to offer customers smart boilers with pre-installed Mostat thermostats. We are thinking about the global market, to integrate it with the leading producers of boilers. We also have a strategy to add two more products. There will be another version of the thermostat. We want to create the same principal device for air conditioners by next year. Q. What path has business gone before entering business incubator and what has changed / improved since its first steps? The business incubator has changed us, we have learned many things. We have received many opportunities. Being a startup is very hard, one person has to be responsible for many functions simultaneously. There were some hard times which is usual for startups but this has been a great experience. Q. How do you foresee your role in Tbilisi’s urban development? A. Many companies are speaking about development of the green direction. We make a green product which cares about the environment and it would be optimal if construction companies were to collaborate with us.

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City within the City

BESO JIKURAULI

Interview with Beso Jikurauli, General Director of AS Georgia-Dirsi

The FINANCIAL

he company “AS Group Investment” has been operating in the construction industry for over 15 years. The company has launched up to 40 successful projects on both local and regional markets. Georgia is one of the major investment countries for the Azerbaijani company, in which it has invested 200 million dollars over 7 years. Investments have included the first completed stage of Tbilisi’s largest building project - the Dirsi residential complex. The project consists of five stages, and by the end, the total investment will exceed 1.5 billion.

The FINANCIAL interviewed Beso Jikurauli, General Director of AS Georgia-Dirsi, about one of the largest projects and investments ever implemented in one of Tbilisi’s districts.

The year 2018 for Dirsi “2018 has been more active compared to last year. We have improved communication with the target market, and as a result of this we have increased sales. In 2018, according to the statistics, every fourth visitor buys a flat, which is a very good result and a figure we are trying to maintain and improve. We think it is necessary to better understand the target audience, who we are and what the infrastructure is like on our territory, so that there is more emphasis on sports-recreational life; healthy lifestyle; there are lots of places to work out; walking paths; children’s playgrounds. This has a positive influence and in 2018 we made quite good progress, we have been gaining many new residents: most of them being young families with 1 to 2 children.”

Future projects “This year we have processed a new project, which is very important not only for us but for the whole of Tbilisi as a city. This is the construction of 8 hectares of a European park and boulevard, where more than 5000 trees will be planted. A 2 km boulevard will be built on the river Mtkvari coast, where open cafés, biking and commercial objects will be located. The name of the project is “City within the City”. An important ecological zone will be created not only for the residents of Dirsi, but for all of the city’s residents. The building site for the project is planned to start from next year. No one from a private company has endeavoured to build such a grand park in recent times - so this is something for us to be proud of. Throughout this process we will be collaborating with Tbilisi City Hall, City Council and we hope such a precedent will be exemplary for our colleagues, all together we will create desirable, green, healthy environment for our future and this will be a really important occasion for Tbilisi.”

Difference “One of the most important factors in the implementation of our in-

vestment in the part of the strategy is that we have chosen no targeted constructions in Tbilisi but complex construction. AS Georgia was one of the first companies in Tbilisi to have started a complex construction. This means that we have built a living complex where full infrastructure is provided: sports infrastructure for healthy living; wide pedestrian, car-free zones; a kindergarten; school; learning resource centre; business centre; shopping centre; supermarkets; easy parking areas; both underground and above ground. This is the main diﬀerence; we have designed an entire selfsuﬃcient territory to live on.”

Urban development “Our territory is spread over 47 hectares, and is a 10 minute drive from Tbilisi’s centre. We are going to build the district and a huge complex, where no less than 30 000 people will live, which means that we will be creating an entirely new district that will employ lots of people.” “Previously there was a construction landfill site that had sat filled with construction waste for decades. Approximately 10 million dollars was spent on the clear up

of this waste. The complex is being built on a rocky surface with high quality construction materials, 80% of the walls are monolithic, which provides its own form of particular strength.Consequently, we think that apart from the fact that we have built a complex that will be very prestigious in the future, we have also helped save Tbilisi from what was an impending ecological catastrophe.” “We are creating the best environmental conditions for living in the historical “Dirsichala” district of Tbilisi - which is where the name Dirsi comes from. The ecologically healthy district, is very close (just 5 km) from the city centre, Freedom Square, and 7 km from Tbilisi airport. The district is characterized by unique urban planning, there are large spaces between buildings, safe yards. Everything is adapted for the needs of people with disabilities. From the following year, according to a new project, apart from a number of commercial facilities, numbers of startup-businesses will join our city that is fully in the framework of the company’s social responsibility to promote small entrepreneurs in Georgia”. “City within the City” is not just a living environment but a place for successful beginnings.”

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Americans Would Rather Renovate than Buy a New Home

Giorgi Baramidze: MP

“You have spent so much money on agriculture but agriculture has not increased and its share in the economy has decreased.” Egnate SHAMUGIA FactChek

VERDICT:

FactCheck concludes that Giorgi Baramidze’s statement is MOSTLY FALSE.

RESUME: A substantial growth in the

funds allocated for agriculture started in 2012. The share of agriculture in the total economy was 8.6% in 2012. Funding for agriculture increased annually until 2017. In 20132017, budget funding amounted to GEL 1,456.7 million (in accordance with the changes in the consumer price index, the adjusted amount would be GEL 1,265.7 million) whilst the real growth in the agriculture sector constituted 12.1%. At the same time, the share of agriculture in the economy exceeded 9% in 2013-2016 although it dropped to 8.2% in 2017. This was the first time when the figure was behind the number for 2012. Although the real growth in the agriculture sector in 20132017 was comparably lower as compared to other fields of the economy, added value has been created in agriculture. Therefore, it is incorrect to claim that the agriculture sector has not increased. The share of agriculture in the

total economy was lower as compared to the figure for 2012 only in 2017. In addition, the statistical data of these years indicate that the rate of return on state investment in agriculture is rather low.

ANALYSIS At the committee hearing

of the 2019 draft state budget, United National Movement member, Giorgi Baramidze, spoke about agriculture. As he stated, agriculture has not increased as compared to 2012 and its share in the total economy has declined. In his statement, Mr Baramidze emphasised the deteriorated situation under the Georgian Dream’s rule. Since 2012, funding allocated for agriculture has significantly increased. In 2011, the share of assignments for agriculture from the total budget was 1.1% (GEL 85.1 million) and increased to 2.9% (GEL 228.4 million) in 2012. Agriculture funding increased annually until 2017. In 2017, it was at the level of the previous year. In 2018, agriculture funding has decreased as compared to 2017. In 2013-2017, the total funding allocated for the Ministry of Agriculture reached GEL 1,456.7 million. Even though funding for the Ministry of Agriculture in-

creased substantially in 2012, the agricultural sector, in fact, decreased by 3.8% in that year. After an 11.3% growth in 2013 owing to increased budget funds, the agriculture real growth rate has never been more than 1.6%. In 2017 it decreased by 2.7%. Therefore, notwithstanding the increased funding for agriculture in 2012-2017, the agriculture growth rate has been unstable. In total, the agriculture sector increased by 12.1% as of 2017 as compared to 2012. This means that in the aforementioned period, GEL 1,456.7 million was spent1 from the state budget and only GEL 190.6 million of added value was created. In regard to the share of agriculture in the total economy, it was 8.6% in 2012 which increased to 9.4% in 2013. Over the next three years, however, it declined by 0.1 of a percentage point annually and dropped to 8.2% in 2017. This means that other sectors of the economy have increased more as compared to agriculture. This fact highlights the lower productivity of agriculture as compared to other fields of the economy. 1 The value of these funds measured in 2010 prices constitutes GEL 1,265.7 million. The real GDP figures are also measured in 2010 prices.

Graph 1: Funding for Agriculture and Growth Rates (GEL Million, %)

Source: National Statistics Office of Georgia, Ministry of Finance of Georgia

The FINANCIAL -- Across the country, people are largely happy with their current homes, and would rather stay in them and make updates than move. The latest Zillow Housing Aspirations Report finds that 76 percent of Americans would rather use a set amount of money to upgrade their home to meet their needs instead of as a down payment on a new home. This is especially true for older or retired Americans. Eighty-seven percent of peo-

ple who are 55 years or older, and 91 percent of retirees, would renovate their homes instead of using the money for a down payment on a new one. Overall, homeowners are generally happy with their current homes, according to the 2018 Zillow Group Report on Consumer Housing Trends, with 83 percent saying that they love their home. Most homeowners – 63 percent – don’t have any plans to sell their homes. The top reasons for not mov-

ing are that they love their home and they don’t want to deal with the hassle of moving. The preference to adapt a home to their needs instead of selling it and buying a different home could be contributing to the ongoing inventory shortage most markets are facing. Nationally, the number of homes for sale has fallen on an annual basis for 43 straight months, although the pace of the decline has slowed in recent months.

“We have a clear vision of how to develop the city” Continued from p. 3

fected by congestion issues, as well as it being fast and safe. After the addition of various new components and a period of time, it will become even faster and more comfortable. After the resumption of public transport routes and the replacement of the fleet, buses will be comfortable as well. As for the owners of private cars, we hope that more and more will switch to using public transport after our transport reform. Q. How should the seemingly chaotic construction projects in the city be addressed? How is Tbilisi’s government currently dealing with this issue? A. The capital has been developing chaotically for 20-25 years and it is already impossible to improve the situation. However, we have a clear vision of how to develop the city. The decisions should first of all be based on a general plan for land use and we have taken this issue into consideration in our structural reform. Q. Is anyone consulting the opinion of Tbilisi’s population on how to develop the city or how the population of Tbilisi sees the urbanization process? A. This is a matter of community involvement, which we attach a great deal of importance to. The e-platform “Your idea to the Mayor of the city”, which I mentioned above, is a good mechanism

for increasing citizen activity and at the same time, for the development of democratic approaches. Q. What is your opinion on foreign investments in Tbilisi? A. I welcome any investment, any useful project that will support the city and promote employment of locals. The main thing is that it must not conflict with the common interests of Tbilisi and its residents. Our door is always open to investors. Q. There has been an increase in violent crimes reported by foreigners in recent years, along with several political actions by ultranationalists and neo-Nazi groups (including in Tbilisi) in recent years. What are you doing to reduce crime in the capital? A. The state operates according to the law and we already have a case where a member of one such gang was detained. It is important for us that different groups of society can coexist peacefully and the Government is working on this. As the Mayor of the capital, I would say that if we compare Tbilisi to the capitals of different countries, I do not think there is more crime here. On the contrary, various international studies have shown that Georgia is one of the safest countries. Q. Traffic in Tbilisi appears to be increasing, which is bad for air quality and the liveability of the city. What are you

doing to reduced traﬃc congestion in the city? A. One of the ways is the development of public transport, in addition, we are working on the creation of a zonal parking system, according to which parking fees will be increased in certain streets and districts. This is another way for citizens to take advantage of public transport, which is much cheaper. Q. What are you doing to improve air quality and protect ecological spaces? A. For this purpose, mobilization not only of the capital, but of the whole of society and central government is needed. You know that for all private cars from January next year, technical excellence is mandatory, which is certainly one of the main preconditions for improving environmental and air quality. On our side, we are working on the development of public transport to reduce the need for private cars. Their owners have to come to the realisation that each faulty car carries a big risk of air pollution. If we are able to reach a consensus on this, we will be able to resolve this problem more quickly. Q. After having modernized the city you govern, how would you like to be remembered after you leave oﬃce? A. I would like to do a lot of good work with my team, and for years afterwards to be able to meet with happy Tbilisi residents in the streets. That would be the biggest achievement.

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Is Russia Back as the Main Foreign Provider of Electricity to the Georgian Market? Continued from p. 2

previous year. The increase in imports from Russia, however, was 258%, while imports from Azerbaijan decreased by 94%. (figure3)The crucial questions now are the following: is this just a one-time event or is Russia going to become once again the main provider of electricity to the Georgian electric system in the periods of electricity deficit, starting from the upcoming the winter season? Is this bad for Georgia? To answer these questions, we explored the reasons behind the sudden surge in imports from Russia. According to ESCO data, over the years most of the imported electricity was purchased on the balancing market. The decision about where to purchase foreign electricity on the balancing market depends on the prices the providers are offering, with the lower price provider supplying balancing electricity to the country. If this rule has been followed also this month – which we think is the case – this means that Russian electricity prices were lower than the prices offered by Azerbaijan. Assuming a relative stability in Azerbaijani export prices, this would imply an overall decline in import prices for Georgia. Indeed, in Septem-

ber 2018 import prices declined by 8% compared to the previous year (Figure 4), as for the august 2018 import price has decreased by 6% (Figure 5). What was the reason behind the price decrease in Russia? Investigating the oﬃcial website of the electricity system operator of Russia, we found out that electricity generation and consumption have both increased by 2% in the month of September, compared to August. Moreover, in both months generation substantially exceeded consumption by 64423.29 MWh and 69192.67 MWh respectively. Hence, there was a 7% growth in the electricity available for exports, which might explain the price decrease. Another factor aﬀecting import prices could be the currency utilized for settlement. Currently electricity is traded in dollars on the balancing market. Even though the Russian Ruble has depreciated by 2% against the USD dollar in September, compared to the previous month, according to the Central Bank of the Russian Federation. the Georgian Lari has depreciated by 3%5 against the USD dollar over the same period. This evidence supports, therefore, the idea that the decline in the price of imported electricity is likely due to greater surplus of electricity in Russia.

More questions follow from this finding. Will Russia be able to increase generation even more and oﬀer a lower price compared to Azerbaijan? Is this development positive or negative for Georgia? In the short term, Georgian consumers and firms can benefit from lower import prices. On the other hand, however, if this trend was to continue, it might imply lower incentives to invest in new generation capacity on the Georgian market and – as a result, a greater dependence on foreign electricity (potentially leading to energy security issues). What should be, in this case, the response of the Georgian government? These are all interesting questions that, in due time, will need an answer. For the moment, what is certain is that the evolution of electricity imports should be monitored carefully in the months to come. 1 Junior Researcher, EEPRCISET-PI. 2 Junior Researcher, EEPRC- ISET-PI. 3 Professor, ISET and ISETPI. 4 Monthly exchange rate was calculated as the average of the daily rate based on the data from the Central Bank of the Russian Federation 5 Monthly exchange rates were compared based on NBG data

Figure 2.Georgian Imports in 2018 (mln. kWh)

Figure 3.Georgian Imports in September (mln. kWh)

Mikheil Saakashvili: FORMER PRESIDENT

In my time, the economy increased fourfold, by 400%. In Ivanishvili’s time, the economy denominated in USD has practically not increased Egnate SHAMUGIA FactChek

VERDICT: FactCheck concludes that Mikheil Saakashvili’s statement is a MANIPULATION OF NUMBERS.

RESUME: The economy is measured in the national currency and it is inappropriate to directly convert it into a foreign currency in order to get measurements for analysis over time. The figures based on this approach do not reflect a real trend in the changes of the volume of an economy. In addition, Mr Saakashvili’s statement also lacks objectivity given the substantial difference in the time periods and the base effect. Although it is incorrect to measure the gross domestic product (GDP) converted into a foreign currency, the former President of Georgia employs a method which converts nominal GDP figures into USD where inflation is not excluded and the real picture is further distorted. The volume of the USD converted nominal GDP in 2004-2012 did increase almost fourfold; however, this figure is substantially incongruent with the real growth figures of the economy. In fact, in 2004-2012, Georgia’s economy increased by the factor of 1.7; that is, by 70.8%, whilst in 2013-2017 the economy increased by the factor of 1.2; that is, by 20.2%.

ANALYSIS On air on Rustavi 2’s talk

show, Archevani,the former President of Georgia spoke about his presidency as well as the current situation. Mr Saakashvili stated that Georgia’s economy increased fourfold by 400% under the United National Movement whilst the USD denominated economy has practically not increased under the Georgian Dream. The volume of a country’s economy, the GDP, is calculated in the national currency and reflects the total value of goods and services produced in one year for final consumption. In order to see the real volume of a country’s economy, calculations have to be made in constant prices which exclude the inflation effect and show the volume of goods and services produced for the years in question and designated for final consumption. To measure the economy by converting it into a foreign currency implies that the exchange rate effect has a substantial influence. The figure based on this method ofmeasurement does not reflect a real trend. Therefore, it is incorrect to assess the economy by using its volume expressed in USD as it gives the possibility for the manipulation of numbers. Consequently, Mikheil Saakashvili’s approach for measuring the volume of the economy is wrong. At the same time, a comparison of the aforementioned two periods lacks fairness because there is a substantial difference between

Graph 1: Real GDP and Economic Growth Rate (GEL Million, %)

Figure 4. Import Price in 2018 (Tetri / kWh)

Figure 5. Import Price in September (Tetri / kWh)

Source: National Statistics Office of Georgia

these periods (nine years and five years). Of additional consideration is the base effect which clearly played a role in the post-revolutionary years. Further, a fourfold growth means a 300% growth instead of a 400% growth as claimed by Mr Saakashvili. In 2014-2012 the real GDP average annual growth rate was 6.2%whilst the GDP volume increased by the factor of 1.7, a 70.8% growth, between 2003 and 2012. In regard to the economic growth rate since 2012, the average annual growth rate was 3.7% between 2013 and 2017. In total, the real GDP volume increased by 20.2% in 2017 as compared to 2012; that is, by the factor of 1.2. Apart from the fact that measuring the economy in a foreign currency is simply wrong, the numbers in Mikheil Saakashvili’s statement are the figures based on converting the nominal GDP into USD. This diverges from the actual volume of the economy because using thismethodology to measure the GDP does not exclude the inflation eﬀect whilst the currency exchange rate remains a factor. To use the methodology employed by the former President of Georgia, the volume of the economy did indeed increase almost fourfold; that is, by 297%, and did not increase in the period of 2012-2017. However, a measurement based on these data remains considerably far from reality.

urban tbilisi 2018

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WintekPro has introduced selfcleaning windows on Georgian Market Interview with Givi Beridze, Partner at Wintekpro and CEO & Co-Founder of Edison The FINANCIAL

intekPro is a company oriented on developing hi-tech products, such as their multifunctional self-cleaning window. Its vision is to disrupt this industry using innovative technologies. The FINANCIAL talked to Givi Beridze, the Partner at Wintekpro and CEO & Co-Founder of Edison, which is the company’s technical team. Q. What is the technological novelty you offer? Where did the idea for it come from? A. Have you ever seen or experienced how hard it is to clean a window? What about the windows on huge towers and tall buildings? If you do not know this industry, you can’t even begin to imagine how hard it is to clean the windows of huge buildings and how much money it costs to have such a service carried out frequently. This is the problem we have tackled. Wintekpro has created an innovative technology which will transform this industry and change the way the owners of huge buildings and even ordinary people clean their windows. By just the simple click on a controller, owners can activate our multi-functional selfcleaning windows and clean an individual room or whole building instantly. Q. How did you create Wintekpro’s multi-functional self-cleaning window? A. The founders of Wintekpro developed the multi-functional self-cleaning window. The electrical hardware side of this project was done by Edison.ge. The founders of Wintekpro were in Turkey, where they developed designs of a multi-functional self-cleaning window and created molds, which are used for the manufacture of a number of these windows. After that, Wintekpro became a partner of Edison, which developed the electrical hardware side of the product. Merging these two sides, Wintekpro created a perfectly working product, which is now ready to be installed on any building. Q. How does Wintekpro work? A. We have developed a multifunctional self-cleaning window that has two major functions: 1. With one click, it can clean the window by spraying a special spray onto the glass and activating a mechanism which is installed on high quality material, that cleans glass perfectly. 2. It has a ventilation system as well. With one click of the controller, the owner can open ventilation and have fresh air in the room. The owner can choose different addons while purchasing the product, as a result different kinds of air fresheners can be installed so that one can have fresh air in the building. Q. Where can one shop for Wintekpro’s multi-functional self-cleaning window? A. Wintekpro’s self-cleaning

GIVI BERIDZE

windows can be purchased by contacting us on our Facebook page https://www.facebook.com/Wintekpro/ or by mobile phone +995 598 91 30 00. Q. What kind of communications strategy do you have to inform customers about the product?

A. We are exhibiting our products at huge exhibitions, which are held in Pekin, Guangzhou, Baku, etc. We are showing potential customers the product itself, so they can see and experience how powerful it is and how perfectly it cleans window glass. Q. How do you see your role

in the urban development process of Tbilisi? A. The one thing Tbilisi needs right now is innovation and technologies! These are two crucial aspects which can make Tbilisi one of the most attractive cities in the world. As time goes on, we see huge towers, new buildings being

built and most of them have dirty windows 80% of the time, because the weather is unpredictable sometimes. That’s why our product is great to implement in Tbilisi. Using our technology, every building, tower and house in Tbilisi can be cleaned by just one click of a button.

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“The Georgian Insurance market is immature but has big potential” Giorgi Baratashvili, CEO of Insurance Company Aldagi

GIORGI BARATASHVILI

Q. What kind of CSR activities did your company initiate this year? A. We have been actively carrying out CSR activities for the last 5 years. We initially decided not to send out New Year gifts to our corporate clients and the amount we saved from that is instead being allocated to support vulnerable families and the homeless. For the last 4 years, we have been donating apartments to such families at New Year. I think that the contributions of customers have been significant in this, as everything is being done on their behalf. We also donated to the victims of the tragedy of 13 June. We gave financial support to the family of a deceased firefighter. Another example of our CSR involvement is that we are taking care of a boy wrestler from an ethnic minority who has thus far been unable to go to a tournament. We will be sponsoring him until he

reaches 18, and sincerely hope that he will be able to win a medal for Georgia through his eﬀorts. Q. How is Aldagi involved in state projects? A. As a leading company we believe we are playing a big role in the development of the insurance sector through our involvement in state social projects. In 2014 we established Agro Insurance together with the state which has been actively and well implemented for the last 3 years. Agricultural insurance is very important for the development of the economic condition of the rural population and for strengthening and facilitating their access to financial resources. It is a crucial means of managing risk for farmers. The state subsidizes 50-70% of insurance premiums and we sell agro-insurance throughout the whole of Georgia. Q. Why is it important for your partners to collaborate with Aldagi?

A. First of all it is a form of stability. Aldagi is the market leader and one of the oldest insurance companies and private companies in Georgia. It was the first company to be founded in 1990 after the collapse of the Soviet Union and since then has been actively functioning for 28 years. Stability, quality of insurance, financial reliability and risk management are the main factors that distinguish Aldagi from its competitors on the market. Q. How would you appraise the insurance market in Georgia? A. I already mentioned that the history of private insurance in Georgia is 28 years old. By global standards though, insurance in Georgia is still immature, in the initial stages really, therefore there are many things that are yet to be done. We feel this responsibility of being the leading company that has been operating on the market since the start,

and as the one that introduces new products. We believe that the Georgian insurance market has big potential. Q. What are some of the challenges when rolling out insurance programmes? A. The level of awareness of people; to provide information that insurance is, in fact, essential. We oﬀer customers a simple and cheap insurance policy. Aldagi oﬀers GEL 50 fire insurance for apartments and third party liability insurance for drivers, worth GEL 60 a year. This guarantees protection for people in the event of great expense caused by a sudden accident. Amongst the wider population though there is unfortunately a feeling that insurance is a waste of money. Insurance is generally a collective responsibility. Insurance companies unite within them a group of similar category products to ensure against problems.

A culture of having insurance is growing slowly in popularity. To this end, we are periodically introducing and providing information about insurance to the public. Our responsibility is to inform the population about the need for insurance - that insurance is one of the major risk management options. Q. How is Aldagi involved in the urban development process of Tbilisi? A. In terms of urban development, we are actively trying to not just concentrate on Tbilisi but also on different regions of Georgia. Two years ago, we issued a livestock insurance policy: whereby an owner pays just GEL 30-50 each month and in the event his livestock dies, he will be returned the money. As for Tbilisi, we are trying our best to open branches in the suburbs, and employ local people, in an eﬀort to decentralise and not only focus on the central districts of Tbilisi.

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“Holiday Inn Tbilisi is continuously among the top five Holiday Inn Hotels in Europe”

RUSUDAN KALANDADZE

Rusudan Kalandadze, GM, Holiday Inn Tbilisi

The FINANCIAL

n 2010, Adjara Group entered the Georgian hospitality sector by introducing and managing the first local Holiday Inn franchise, which successfully pushed the design and concept boundaries for the international brand. It turned the former Adjara Hotel into a new, modern establishment while preserving the initial face of the building. Since then, Adjara

Group has revolutionized the country’s hospitality industry by creating and managing the first Georgian lifestyle brands - Rooms Hotels in Tbilisi and Kazbegi, Stamba Hotel and Fabrika Hostel. The company has gained international recognition for turning historic and abandoned brutalist structures into stylish, contemporary properties. Rusudan Kalandadze, GM of Holiday Inn Tbilisi, talked to The FINANCIAL about the evolution of the Georgian hospitality industry. Q. How is Holiday Inn Tbilisi diﬀerent? A. The hotel combines high quality standards of Intercontinental Hotel Group (IHG) with

the essence of Georgian hospitality. We try to offer the best and innovate while staying authentic and true to the country’s culture and values. The hotel is designed for business travellers as well as visiting families and offers a variety of luxury features and services. We particularly focus on MICE travellers and have the capacity to accommodate large groups for high-level events and meetings. MICE tourism has become very important for the country and I believe the hotel plays a key role in developing it. Q. How do you determine the success of your hotel? A. Our goal is to have many happy customers. We try to offer a hotel experience rather than just an accommodation. We try to exceed expectations and I am very happy to say that based on our guests’ ratings, Holiday Inn Tbilisi is continuously among the top five Holiday Inn Hotels in Europe. Q. What are the new de-

velopments at the hotel? A. Holiday Inn Tbilisi is always expanding and evolving. We continuously renew the hotel’s facilities and open new ones to oﬀer richer experiences. This year, our outdoor swimming pool area was renovated and became a great success throughout summer. In addition, we have added new conference rooms, meeting spaces and ballrooms which are further contributing to the ‘meetings industry’. Q. How do you think Georgian hospitality is changing and what about the competition? A. I am happy to see what an appealing tourist destination Georgia has become in the last few years. According to the World Tourism Organization, in 2017 Georgia was among the top 10 fastest-growing destinations in Europe with a 27.9% increase in the inflow of international visitors. The country has gained fame for its ancient culture, authentic cuisine and wine making

history, untouched nature and centuries-long hospitality traditions. Hospitality plays a crucial role in developing the tourism industry and many new hotels are opening across the country. We are indeed happy to see new players on the market and we welcome a culture of healthy competition which leads to better quality standards. Q. How do you see your role in Tbilisi’s urban development process? A. Adjara Group plays a key role in Tbilisi’s urban development by reconceptualizing historic brutalist structures of the city and turning them into stylish, contemporary properties. Holiday Inn Tbilisi was a turning point, after which the company began creating trend-setting establishments like Rooms Hotels (Kazbegi & Tbilisi), Stamba Hotel and Fabrika Hostel in Tbilisi. These venues blend in with visual aesthetics of the city, while also serving a new purpose.

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New Construction Permits, New Challenges Temur Bolotashvili, Head of Tbilisi’s Building Department talked about current challenges The FINANCIAL

ince the appointment of new administration at City Hall, various reforms have been implemented, including institutional ones. The Architecture Service had two directions for permits and planning. The best international practice shows that there should be a separate, urban planning and building department. That’s why the Architecture Service has been divided and a new Municipal Department of Urban Development has been established, which has been functioning for several months now and is still in a stage of development. Its main purpose and function is to properly plan the city’s urban development with all of its components: transport, environmental protection, etc, that are covered by the land use general plan. The Architectural Department has remained a service provider organization in terms of granting permission for future constructions. On this, The FINANCIAL interviewed Temur Bolotashvili, the Head of Tbilisi City Hall Architecture Service. “Since the very first day we have continuously taken care of the quality of our service, by evaluating our business processes and working on the eradication of deficiencies. It is very important to control the quality of our service, which is why we have adopted

TEMUR BOLOTASHVILI

an internal assessment and monitoring system. This system will remain a constant part of the Architecture Service.” Institutional reform also includes the optimization of resources; overall staﬀ resources have been reduced but permit directions have been increased. We did this at the expense of the apportioning of administrative resources and at the expense of the correct structure. We have cancelled five divisions and created two new ones: evaluation and monitoring and two engineering de-

partments, which are very important. In general, up till now construction permits have been issued only on the basis of an architectural project or in limited cases, experts’ conclusions on structural design. When the new law will be enacted by Parliament, it will be necessary to present other parts of a project, for example a structural part discussed by the engineering department, and it is very important that we will be ready for this process.” According to Bolotashvili, when they first entered the Building De-

partment there were serious issues that needed to be addressed including problems with timeframes, overdue periods, deadlines and displacements from previous days. “It was kind of a challenge for us. Today we can say that for a few months we have had no cases of overdue applications or extensions in violation of the requirements of the legislation. If more time is required than the deadline provides, this should be defined within seven days after submission of an application and should proceed according to the relevant rule that the legislation envisages.” “A sad reality we also faced were permissions that had already been granted, but that were causing a public disturbance through their ongoing processes. I do recall a few specific processes which we in fact had to abolish. It is always diﬃcult when a process has already started which you then have to make a critical decision about. But as it turned out, it was the only right decision in terms of the actual and legal circumstances that we had at that stage. As for the new process, we are already trying to make decisions more accurately, taking into consideration many factors”. There are two main directions important for the issuing of a permit: first, the new technical regulations that came into force in January 2017. These are safety facilities of buildins related to 3rd, 4th, 5th class that are at medium and high-risk building structures and are covered by new, modern safety rules. These are the first such Georgian technical regulations that correspond to best international practice. As regards the procedural issues in terms of construction permits, two municipal services are involved: Environmental and Transport Municipal

Growing Exponentially, Floating Solar Opens Up New Horizons for Renewable Energy: Report The FINANCIAL – Floating solar technologies are creating major new opportunities to scale up solar energy around the world, particularly in countries with high population density and competing uses for available land. The use of floating solar – deployment of photovoltaic panels on the surface of bodies of water – has grown more than a hundredfold in less than four years, from a worldwide installed capacity of 10 megawatts at the end of 2014 to 1.1 gigawatts by September 2018, according to the first market report on floating solar, produced by the World Bank Group and the Solar Energy Research Institute of Singapore (SERIS). The report estimates the global potential of floating solar, even under conservative assumptions, to be 400 gigawatts – roughly the total capacity of all solar photovoltaic installations worldwide at the end of 2017. “Floating solar technology has huge advantages for countries where land is at a premium or where electricity grids are weak,” said Riccardo Puliti, Senior Director for Energy and Extractives at the World Bank. “Governments and investors are waking up to these advantages, and we are starting to see interest from a wide range of countries in Africa, Asia and Latin America.” At some large hydropower plants, covering just 3-4 percent of the reservoir with floating solar could double the capacity of the plant, potentially allowing water resources to be more strategically managed by utilizing the solar output during

Service. The construction permit issuance includes three stages: determination of the terms for land use; the architectural project agreement; and the issuance of the permit. The Environmental Municipal Department determines the qualitative assessment, tactics and information about the planting of trees in the area. The Transport Municipal Service requires the presentation of a transport organization scheme, on how to move traﬃc safely. After determining these terms, the construction permit-seeker can start working on the architectural project. “In ancient Tbilisi we have a special process to issue construction permits. We have a Historical Cultural Heritage Protection Council, which is staﬀed by the Ministry of Culture, Municipality and some invited members. Decisions about constructions are taken in accordance with the recommendations of this Council in Tbilisi. This Council shall discuss new constructions located within the immediate vicinity of structures of cultural heritage and immovable monuments, on whether they will cause any damage, either physically or visually, to these valuable structures. The main purpose and task of the Council is to keep and develop our basic heritage,” Bolotashvili told The FINANCIAL. “As for the general plan for land use, this is a document consisting of many specific areas such as transport, environmental protection, development of specific sites, but in the details it does not stipulate the construction development of a specific, given area. It is very important therefore that we make more precise zoning regulations to ensure that we have healthy, safe and comfortable living and working areas.”

Families with Newborns Moved to Cheaper Housing Markets

the day. Combining solar and hydropower can also be used to smooth the variability of solar output. In a number of countries, floating solar also allows power generation to be placed more closely to urban areas or other demand centers. And while up-front costs are slightly higher, the costs over time of floating solar are at par with traditional solar, because of floating solar’s higher energy yield – due to the cooling effect of water. In water reservoirs, floating solar

panels can reduce evaporation, improve water quality, and serve as an energy source for pumping and irrigation. Asia is the epicenter for this new technology’s expansion, with large floating solar plants at either the tens or hundreds of megawatt scale being installed or planned in China, India and Southeast Asia. “We fully expect demand to grow for this technology and for floating solar to become a larger part of countries’ plans for expanding re-

newable energy,” said Puliti. “It will be important to ensure that best practices are shared among countries and development minimizes any environmental impacts.” The market report is the first in a series of reports on floating solar – titled “Where Sun Meets Water” – being produced by the World Bank Group and SERIS, with funding provided by the World Bank’s Energy Sector Management Assistance Program (ESMAP) and the Government of Denmark.

omen who had a baby in the past year are more likely to have moved than those who didn’t The FINANCIAL --- Americans who moved in the past year tended to move into less-expensive housing markets, a trend that is magnified when looking at women with a newborn baby – and can mean a difference of more than $100,000 in some markets. Across the country, women with a newborn who moved in the past year – whether or not they moved with a partner other family members – moved to a housing market where homes cost $11,500 less than where they moved from, according to a new Zillow® analysis of home value and Census datai. Housing and childcare costs are two of the most expensive things to budget for, with childcare adding thousands of dollars a year to a family’s expenses. The cost of childcare was the most commonly cited reason young adults are having fewer children, according to a recent New York Times surveyii. And while mortgage payments nationally are still relatively affordable compared with historic norms, in some major markets mortgages are less affordable than they were historically, with others nearing that tipping point. It isn’t a surprise that families might look to save money on housing when they have a new child. Parents with a new baby may also move to be closer to family, find a bigger home, or settle in their preferred school district.

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PRESS-RELEASE

Presentation of Kutaisi Free Zone

Top cities for real estate investment in 2018

R The FINANCIAL 1 week ago Tbilisi -- Recently, in October, with the support of Georgian Embassy in Ukraine, in particular Georgian Ambassador Gela Dumbadze and in partnership with Produce in Georgia (Ministry of Economy of Georgia), a presentation of the renewed Kutaisi free zone holding GIH was held in Kiev. Otar Dzhaparidze, CEO and Mikheil Didebulidze, the deputy CEO of GIH, presented new administration structure of the holding. He spoke about new opportunities, advantages, conditions and packages of services that Kutaisi free zone can provide to companies. He explained that holding is focused on attracting international tenant companies that operate in diﬀerent areas of business to carry out their export-oriented business activities in the tax-free zone. About the economic situation and the favorable investment climate in Georgia

talked Tornike Sulaberidze, the deputy CEO of “Produce in Georgia”. His speech emphasized why it is profitable to invest in Georgia. In addition to that both speakers discussed the unique opportunity for the investors to use not only Kutaisi Free Zone’s benefits (such as competitive infrastructure and rental condition) but also the support of the state project “Produce in Georgia” (in particular, in particular, covering up to 10% of the bank loan for the first 2 years and providing a bank guarantee up to 50 %). The presentation was attended by ambassadors from diﬀerent countries, representatives of the Ukrainian Chamber of Commerce and Industry, banking, investment and IT sectors, law firms. As a result, contact was established with the Ukrainian target group and it was planned a return visit for representatives of various companies directly in the free zone of Kutaisi (GIH).

eal estate continues to attract capital, demonstrating its stability and appeal over other asset classes in an otherwise uncertain investment world. However, reading across the three recently published Emerging Trends in Real Estate reports, an undercurrent of caution exists. Influenced by a gradual reversal of monetary policy, latecycle property market and a fundamentally diﬀerent demand environment. Many of those interviewed believe that the sector is at a crucial point in its evolution with those unwilling or unable to embrace change risk being left behind permanently. And those canvased for Global Emerging Trends in Real Estate 2018

cite the sharply increased competition they currently face as record amounts of capital move into the real estate sector. One common theme to the regional reports and the new interviews is the clear trend towards increased capex costs as owner-operators seek to keep their real estate relevant to occupiers – whether that’s retail, oﬃce, logistics or residential. All interviewees for Global Emerging Trends in Real Estate 2018 by PwC agree, these are challenging times for an industry that must somehow strike the right balance between risk management, innovation and entrepreneurship. With real estate late in the cycle, investors and owners will need to utilise any

means necessary to improve the performance of assets. To raise and make money in an increasingly crowded field will require more sophistication and companies that can use technology to give themselves even the smallest edge will thrive. One of the biggest challenges for real estate is technology driven disruption. But it is notable that the recent PwC CEO Survey showed that real estate executives are less concerned with changing the way they run their businesses in the face of disruptions of all kinds, such as cyber threats and technological change, compared to global CEOs in other industries. Only 10% are worried about speed of technology change compared to a 38% global average.

Top cities for real estate investment in 2018

Canada Vancouver Toronto Montreal

Europe Berlin Copenhagen Frankfurt Munich Madrid Hamburg Dublin Stockholm Luxembourg Amsterdam

Asia Paciﬁc Bangalore Bangkok Guangzhou Ho Chi Minh City Jakarta Manila Mumbai Shanghai Shenzhen Sydney

United States Seattle Austin Salt Lake City Raleigh/Durham Dallas/Fort Worth Fort Lauderdale Los Angeles San Jose Nashville Boston

GIRLS CAN DO ANYTHING, Latest Scent Exclusively from ICI PARIS The FINANCIAL

ne of the Leading Perfume companies Ici Paris is welcoming the latest perfume launched by French readyto-wear line Zadig& Voltaire. Girls Can Do Anything becomes the name of a signature trail, the perfect incarnation of new femininity, free, uninhibited and impertinent! A bold fern twisted by the delicate pear bean duo and exalted by a musk-infused vanilla. The company presented its chic and trendy fragrance to the media in an intimate atmosphere at night club Biblioteka, where one could easily smell the scent’s main notes of jasmine, chestnut, sandalwood and vanilla. “Break free from conventional opinions in the blink of an eyes, be the master of your own choices, attitudes and actions, carelessly throw convention to the wind, overthrow the established order, surprise with jubilation, dare the unexpected, with elation, multiply experiences,” Zadig&Voltaire oﬃcials describe the new scent.

“ICI PARIS keeps oﬀering latest scents to its loyal consumers. It’s a trend of 21st century that girls can do many things. Girls Can Do Anything is amazing perfume from Zadig& Voltaire which symbolizes liberation from norms and a new form of femininity;free, uninhibited and impertinent,”Khatia Shamugia, PR and Marketing

Manager of ICI PARIS says. “It’s a fragrance created for a woman who knows what she wants and is not afraid to reach for it. Perfect for everyday life, emphasizing your love for freedom and being yourself. This composition, full of intriguing notes, opens with a fresh aroma of pear, with the accent of bergamot and orange blossoms. Tonka

bean pulsates in the heart of the scent, supported by a delicate hint of vanilla. Girls Can Do Anything perfume will become very popular among Georgian girls,” Shamugia said. Girls Can Do Anything is a fresh sweet scent for those wanting something new for the autumn/winter. We’re loving the bottle. Only Zadig

& Voltaire can make pink look strong and feminine but not clichéd girly. French brand Zadig &Voltaire is a ready-to-wear fashion label established in 1997 by Thierry Gillier, the grandson of Andre Gillierand co-founder of Lacoste. The brand’s name was inspired by the Voltaire book, Zadig ou la Destinee. The Za-

dig & Voltaire style (jeans, boots and leather jackets) gained a solid reputation for accessible, high quality ready-to-wear and soon established a new meaning for ‘luxury’. In 2003, Swedish designer Cecilia Bonstom became the brand’s creative director. She established the rock spirit and bohemian style of the labe’ls iconic torn t-shirts, and silky cashmere knits. Meanwhile, the label diversified into leather goods, jewelery, eyewear, a fragrance, Tome 1- La Pureté, as well as a series of candles. The brand has also launched Zadig & Voltaire Music, an independent music label honoring young rock artists. In 2016, Zadig & Voltaire unveiled their debut fragrances. As Thierry Gillier observes: ‘I can’t imagine life without fragrance. I like it when it leaves behind a trail, asserts a personality. It’s an alchemy between you and someone else.’ To create Zadig & Voltaire’s olfactory ‘statement’, two alter ego scents were created – perfectly bottling the fashion name’s DNA.

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Doing Business 2019: A Year of Record Reforms, Rising Influence The FINANCIAL

the biggest reformer, Rwanda

etween June 2, 2017, and May 1 this year, 128 governments introduced a record 314 reforms benefitting small and medium business and entrepreneurs, enabling job creation, and stimulating private investment. Georgia –an early adopter of Doing Business and the second biggest reformer (after Rwanda) – has cut the amount of time to start a business to 2 days. Colombia is among the many countries around the world reforming their business regulations to stimulate the private sector and spur economic growth. The micro-entrepreneur benefits from a collateral registry in Colombia allowing businesses to register moveable assets such as machinery or even their own products as collateral. More than 1.3 million such assets were registered between March 2014 and October 2016 backing loans from lenders, including some of the country’s largest banks. One-fourth backed credit to micro, small, and medium enterprises.

Nurturing entrepreneurs The buy-in for Doing Business was slow to come in many corners of the world after it launched in 2003. The annual ranking has become increasingly influential, as evidenced by the accelerating pace of business regulation reforms in every region. - 4 of the 10 top improvers—Afghanistan, Djibouti, Côte d’Ivoire and Togo—are countries suﬀering from fragility, conflict and violence; - One-third of all business regulatory reforms were in the economies of Sub-Saharan Africa—a total of 107 reforms and a record for the region - 2 countries from Eastern Europe and Central Asia made the top 10: FYR Macedonia in 10th and Georgia, edging up two spots to 6th - Brazil recorded the largest score improvement in Latin America and the Caribbean, reforming in four areas. - United Arab Emirates entered the top 20 in 11th place. - China, one of this year’s top 10 improvers, advanced more than 30 spots to 46th place in the global rankings. - India became South Asia’s topranked economy, advancing 23 spots to 77th place in the global ranking. “This year’s results clearly demonstrate government commitment in many economies, large and small, to nurture entrepreneurship and private enterprise,” said Rita Ramalho, Senior Manager of the World Bank’s Global Indicators Group, which produces the report. “In addition, there is a wide range of countries reforming this year – it’s more universal. No one questions that these things are important any more, such as the need for a simple process to start a business.” In the last two or three years, “all the large emerging markets – such

as China, India, Nigeria, South Africa, Indonesia, Russia – have taken

ity investors, paying taxes, trading across borders, enforcing contracts,

Obtaining documents is now a simple process for entrepreneurs

“SOUND AND EFFICIENT BUSINESS REGULATIONS ARE CRITICAL FOR ENTREPRENEURSHIP AND A THRIVING PRIVATE SECTOR. WITHOUT THEM, WE HAVE NO CHANCE TO END EXTREME POVERTY AND BOOST SHARED PROSPERITY AROUND THE WORLD.” JIM YONG KIM PRESIDENT OF THE WORLD BANK GROUP

on this agenda,” said Sylvia Solf, head of the World Bank Group’s Reform Advisory Unit, which advises governments on ways to improve the business environment. “The fact that they are doing this is groundbreaking.”

Making it easier to do business By putting the perspective of a small, domestic company at the center of its analysis, Doing Business was revolutionary, said Solf. The index measures reforms in 11 areas: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minor-

resolving insolvency, and labor market regulation. The most popular reform is making it easier to start a business. More than a quarter of economies did just that in 2017/18. It now takes an average of 20 days and costs 23% of income per capita to start a business, compared to 47 days and 76% of income per capita in 2006. Thirteen of the top 20 economies have at least one procedure that can be completed online in half a day. Georgia –an early adopter of Doing Business and the second biggest reformer (after Rwanda) – has cut the amount of time to start a business to 2 days. To streamline business registration, the government launched the first Public Service Hall in 2011 – a one-stop-shop of government services. Today, 19 Public Service Halls process clearances for multiple agencies, with the option of online payments by credit card.

like Vakhtang Kajrishvili, founder of Tbilisi-based Badagi, a company producing a traditional candy called churchkhelas. “We quickly and easily obtained every necessary document.” Kajrishvili started with one employee and now has seven shops selling a variety of Georgian products, as well as eight dedicated stalls in a supermarket chain. A recent surge in tourism has made a ‘big diﬀerence” to his business and he is eyeing European Union markets. With financing from the European Bank for Reconstruction and Development and the Ministry of Agriculture, he is building a factory for processing fruit. “The biggest challenge now is maintaining high quality within production,” he said. “Soon we will have a Euro standard factory.”

Insights from

Economies that do well in Doing Business generally have a strong egovernment to deliver services to citizens and firms. E-government also cuts red tape and reduces corruption, said Ramalho. Strong leadership was key to reforms in Rwanda, Georgia, and Colombia – the first countries to be inspired by Doing Business to reform their regulations. Rwanda and Georgia are the first and second biggest reformers in the history of Doing Business, and Rwanda was again a top reformer this year. “You need to have strong leadership in a sustained and broad way,” said Ramalho. “Doing Business reforms tend to span across government. It’s important to have leadership at the top saying we need to do this.” In Rwanda, there was consensus in the years following the genocide and civil war that the private sector must be the key driver of economic transformation. The government set out to create an environment that would enable businesses and investments to thrive, said Louise Kanyonga, Head of the Rwanda Development Board’s Strategy and Competitiveness Department. “Rwanda has adopted a very bold and ambitious approach to reforming its business environment,” she said. “We benchmark ourselves against the best performers in the world and we think big.” She said Doing Business inspired reforms in key areas: Registering property: The reform with the biggest impact. Rwanda completely overhauled the land system to establish property rights and digitized the land registry. Starting a business: Business registrations more than doubled after introducing electronic online business registration. Rwanda has reduced the amount of time needed to start a business from 43 days to a mere 4 days today. Getting credit: Modern secured transactions laws oﬀering strong protections to secured creditors have increased confidence among lenders and expanded access to finance Paying taxes: Simplified tax systems and regulatory reforms increased tax compliance and resulted in higher tax revenues. The small, landlocked African nation has become one of the world’s fastest-growing economies, with a rapidly urbanizing middle class. Kanyonga said private investments have grown by 60% over the last 8 years, and foreign direct investment alone has grown by close to 40%. Yet there is still much to do. Rwanda now needs to position itself as a future-ready economy that can compete on the global stage, she said. “We need to ensure that we are equipping our people with the skills for the future and increasing the adoption of technology and innovation among our firms.”

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Americas: Why You Should Sell Your Home in 2018

The FINANCIAL -- If you’re planning on selling your home this year, you’re probably making a pretty good financial decision. Economists and real estate financial experts all agree that we are in the middle of seller’s market. A seller’s market is mostly about supply and demand, but there are other contributing factors. When inventory exceed the amount of buyers, you are looking at a seller’s market. Another sign is when homes are selling quickly and at prices above asking. If you’re selling in this environment, you have the advantage and might even receive multiple bids. Let’s take a closer look at the reasons 2018 may be a prime time to list and sell your home…

Inventory Is Low And Demand Is High This one couldn’t be any easier to figure out: the amount of homes for sale exceeds the number of interested buyers in the market. Basic sup-

ply and demand. In this case, it puts sellers in the driver’s seat. As a seller, you can lean towards the high end when setting your price. Not so high that you’re out of everybody’s range in your neighborhood, but just high enough that someone will put in an offer. And don’t get too worked up over your first offer, because another one is probably just around the corner. Explain to the buyers that you need a couple days to mull it over. In that time you can prepare your counter offer and wait for another offer to roll in. If multiple offers do become a reality, then you’re that much closer to a bidding war and that much closer to getting more than you listed for.

are pretty good. The current 30-year mortgage rate is about 4.40 percent, according to Bankrate. With mortgage credit still readily available and aﬀordable, but rates ticking up slightly, buyers are looking and they’re serious. Whether you believe the economy is riding high solely because of the new administration or you feel it’s simply continuing the path it was put on, there’s no denying that the U.S. economy is strong. Unemployment is down, job numbers are up, the GDP is growing and consumer confidence is solid. It all adds up to more buyers having more money to spend.

one in the real estate industry wants to think about, but something that must be considered. They are also possible realities that might be encouraging buyers to buy now. According to this article from CNN-Money, there are tangible signs that the housing market, specifically housing financing, are displaying recession warning signs. The Fed is expected to raise interest rates two more times before the year ends. These are all factors that could make the argument that now is the time to sell.

The Values Millennial More Buyers Home Market Are Still In The Rising Market

The other side of the coin is buyers: there are many reasons that they are motivated to get into the market right now. Low rates, (but rising!) consumer confidence and rising equity are all contributing to stoke the buyer fire. These aren’t the lowest rates we’ve seen, but historically speaking, they

Throughout the country, home prices continue to make gains. Buyers know they can get more for their own homes when they sell, giving them more cash to buy a home on the market. Purchasing an asset that appreciates doesn’t hurt either. However, lingering in the future, are words like “correction” and “bubble burst.” Words and terms no

One generation has worried and troubled real estate experts more than ever. Millennials, those born between 1981 and 1996 (22 to 37 years old), simply weren’t buying homes they way generations before them did. Although common sense pointed to the fact that five-to-ten years ago Millennials weren’t ready (lifeexperience wise) or financially secure enough to buy a home. Or the fact that they personally witnessed

the Great Recession and we’re still scared from that experience. Or the fact that many were under a mountain of student loan debt. Millennials also seemed to prefer renting over owning, and some seemed to scoﬀ at the concept of homeownership entirely. This alarmed the real estate industry to no end. Well, it looks like Millennials have finally come around. As first-timers, Millennials are forecasted to account for 43 percent of homebuyers in 2018, according to realtor.com data. And thanks to a host of factors, should only get stronger.

Selling Options You can work with a full-service real estate agent, a “discount” brokerage and agent, or you can go it alone as a FSBO (For Sale By Owner). Websites like Fizber specialize in helping For Sale By Owners by providing marketing tools and tips on selling your own home. How long can this seller’s market last? No one’s sure, trying to time the real estate market is a fool’s game. But one thing is for sure; it’s a great time to sell a home if you’re in the position.

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markets

Weekly Market Watch ECONOMY Georgia ranks 6 out of 190 countries in 2019 Doing Business Georgia improved its position by 3 places as is ranked a6th in the WB’s 2019 Doing Business. With this ranking, Georgia is the highest ranked economy in the Europe and Central Asia region, followed by Macedonia (10), Azerbaijan (25) and Kazakhstan (28). Georgia made notable improvements in the following areas as measured by 2019 DB report: 1) Georgia

made starting a business easier by allowing voluntary value added tax registration at the time of business incorporation; 2) Georgia made paying taxes easier by levying income tax on distributed pro¿ts rather than on taxable pro¿ts; 3) Georgia made enforcing contracts easier by introducing random and automatic assignment of cases to judges throughout the courts. Report also mentions that Georgia reduced its relative gap to the best regulatory performance on starting a business the most globally in 2017/18.

Real GDP growth was 5.6% y/y in

Ease of Doing Business s# 9(Top 10) Economic Freedom Index # 16 (mostly free) Global Competitiveness Index # 59 (improving trend) Source: O௻cial data, IMF 1) As of 9M18 2) As of 1H18

Source: GeoStat Note: Rapid estimate for 4Q17

September 2018 Georgia’s economy grew by 5.6% y/y in September 2018 after growing 2.0% y/y in previous month, according to Geostat’s rapid estimates. In September 2018, the growth

Source: Rating agencies

was posted in manufacturing, ¿nancial intermediation, trade, real estate, transport and hotels and restaurants sectors. Overall, real GDP growth was 4.9% y/y in 9M18. Monthly rapid estimates are

FIXED INCOME

October 2018

InÀation was 2.3% y/y and 0.3% m/m in

Annual CPI inflation was 2.3% in October 2018 down from 2.7% in previous month, according to Geostat. Core inflation was 1.7% unchanged compared to the previous month. Annual price changes were driven by price increases in transport (+6.5% y/y, +0.86ppts), healthcare (+6.1% y/y, +0.51ppts) and alcoholic beverages and tobacco (+5.7% y/y, +0.39ppts) categories, while prices were down in clothing and footwear (-7.1% y/y, -0.25ppts). On a monthly basis, there was 0.3% inflation in October 2018. Price increase in clothing and footwear (+6.3% m/m, +0.2ppts) was the major driver of monthly inflation dynamics.

EQUITIES

Source: Bloomberg

Bank of Georgia Group (BGEO LN) shares closed at GBP 16.43/share (+10.51% w/w and -4.03% m/m). More than 435k shares traded in the range of GBP 15.05 – 16.67/share. Average daily traded volume was 66k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, gained 5.23% w/w and lost 4.70% m/m. The volume of BGEO shares traded was at

Source: Bloomberg

0.89% of its capitalization. Georgia Capital (CGEO LN) shares closed at GBP 12.08/share (+5.06% w/w and +5.67% m/m). More than 131k shares traded in the range of GBP 11.49 – 12.25/share. Average daily traded volume was 59k in the last 4 weeks. The volume of CGEO shares traded was at 0.34% of its capitalization. TBC Bank Group (TBCG LN) closed the week at GBP 17.10 (+8.64% w/w and -0.70% m/m). More than 222k shares changed hands in the

range of GBP 15.52 – 17.34/share. Average daily traded volume was 31k in the last 4 weeks. The volume of TBCG shares traded was at 0.41% of its capitalization. Georgia Healthcare Group (GHG LN) shares closed at GBP 2.30/ share (-4.17% w/w and +3.84% m/m). More than 72k shares were traded in the range of GBP 2.30 – 2.49/share. Average daily traded volume was 23k in the last 4 weeks. The volume of GHG shares traded was at 0.05% of its capitalization.

MONEY MARKET * Source: Bloomberg *GWP 12/21 bonds and GEBGG 06/20 bonds are in Georgian lari **Coupon rate 3.5% over the NBG’s re¿nancing rate

Source: Bloomberg

Source: World Bank, Heritage Foundaition and World Economic Forum

based on VAT turnover, ¿scal and monetary statistics.

Source: NBG Note: Index growth means appreciation of exchange rate, decline means depreciation of exchange rate.

Source: NBG

Corporate Eurobonds: Bank of Georgia Group Eurobonds (GEBGG) closed at 6.4% yield, trading at 98.3 (+0.1% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.5 (unchanged w/w), yielding 10.7%. Georgia Capital Eurobonds (GEOCAP) were trading at 92.3 (unchanged w/w), yielding 7.9%. GOGC Eurobonds (GEOROG) were trading at 101.9 (-0.1% w/w), yielding 5.9%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 106.4 (+0.2% w/w), yielding 5.8%. Georgian Sovereign Eurobonds (GEORG) closed at 105.3 (+0.1% w/w) at 4.5% yield to maturity.

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

Re¿nancing loans: National Bank of Georgia (NBG) issued 7-day re¿nancing loans of GEL 1,170mn

(US$ 430.1mn). Ministry of Finance Benchmark Bonds: The nearest treasury security auction is scheduled for November 7, 2018, where GEL 40.0mn nominal value 1-year T-Bills will be sold.

Source: NBG *Note: 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 tariɣs, 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

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15 Lubliana Str.

Tel: 251 00 01 Fax: 253 00 44 info@zarapxana.ge www.zarapxana.ge

GREEN BUILDING

CITY AVENUE Hotel

A Class Business Center

Agmashenebeli Ave.140B; 0112, Tbilisi, Georgia; Phone: +995 32 2244 144 Email: info@cityavenue.ge; Web: www.cityavenue.ge

6 Marjanishvili Street

Hotel River Side +(995 32) 224 22 44; Right bank of Mtkvari , Brosse Street Turn info@riverside.ge

4 Freedom Square, Tel: +995 32 254 70 30 Fax: +995 32 254 70 40 tbilisi@citadines.com

P: (+995) 322 555 888 M: (+995) 596 555 885 E: info@vinotel.ge, reservation@vinotel.ge W: www.vinotel.ge

4, Freedom Square, Tel: 2 779 100 www.CourtyardTbilisi.com courtyard.tbilisi@marriotthotels.com

Addr: # 14/14 I.Kurkhuli Str. Tel : 55 66 55 http://www.laerton-hotel.com/

Because life is about living

45a M.Kostava St., 0179 Tbilisi, Georgia;

13, Rustaveli Avenue.; Tel.: 2 779 200 www.TbilisiMarriott.com tbilisi.marriott@marriotthotels.com

Tel: +995 422 229000 E-maill: info.batumi@ sheraton.com www.sheraton.com/batumi

Tel.: (+995 32) 219 11 11 www.hotelcoste.ge

13 Shavteli Str. Tel: 2439494 info@ambasadori.ge www.ambasadori.ge

Hotel “O. Galogre” Radisson Blu Hotel Batumi 1, Ninoshvili str., Batumi Tel/Fax: 422255555 info.batumi@radissonblu.com radissonblu.com/hotel-batumi

Addrr: 26 May Square Tel: 2300099 E-mail: info@hi-tbilisi.com www.hi-tbilisi.com

8, Vakhtang Gorgasali Str. Batumi, Georgia Tel: +995 422 27 48 45 info@hotelgalogre.com www.hotelgalogre.com

Divan Suites Batumi

Radisson Blu Iveria Hotel Rose Revolution Square 1 Tel.: 240 22 00; Fax: 240 22 01 info.tbilisi@radissonblu.com radissonblu.com/hotel-tbilisi

Address: Jordania/Z. Gamsakhurdia Str. 8/15 (422)255 522 info.batum@divan.com

№ 1 Kheivani street 12/13; Tbilisi, Georgia Phone: (+995 32) 2 24 23 21; Phone: (+995 32) 2 24 23 22 E-mail: reservation@cronpalace.ge

Betsy’s Hotel 32-34 Makashvili Street, 0108, Tbilisi, Georgia

Tel.: 293 14 04, Fax: 299 93 11 info@betsyshotel.com www.betsyshotel.com

GEORGIA PALACE HOTEL

275 Agmashenebeli Ave., Kobuleti, Georgia Tel: 2242400 Fax: 2242403

E-mail: info@gph.ge, www.gph.ge

6 Kavsadze Str. Tel: 2 25 15 45 2 55 44 55 www.lottravel.ge

5 Chavchavadze Ave. Tel.: 222 44 17 577 22 99 22 plasticsurgerygeo.com

Tel: 31 99 99 hotel@tifilis.ge addr: #9 Grishashvili Str.

Best Western Tbilisi 4 Freedom Square Tel: 2988 988, Fax: 2988 910 E-mail:gmt@gmt.ge, www.gmt.ge

Tel: 277 00 40/50 Addr: 20 Metekhi str. http://www.tbilisiinn.com/ info@tbilisiinn.com

Addr: 11, Apakidze str. Tel.: 2 300 777

Hotel “Tiflis Palace” 3 Vakhtang Gorgasali St, (+995) 32 2000245 reservation@tiflispalace.ge

HOTELS & PREFERENCE HUALING TBILISI The tickets are available at tbilisi international airport freedom square 4 courtyard marriott hotel, 1st floor

Tel: 2400 400; 2400 040

Tel: 2 50 50 25; 2 97 32 97 Fax: 2 50 50 26 Email: info@hotelspreference.ge

Addr: Hualing. Tbilisi Sea New City

BETSY’S HOTEL

Address: 1/3 Melashvili Street 6000 Batumi,Georgia | +995 422 225790 www.batumiworldpalace.com info@batumiworldpalace.com

Tel: +(995 32) 2931404 E-mail: info@betsyshotel.com; reservation@betsyshotel.com Address: 32-34 Makashvili St.

Tel: +995 422 222299 e-mail: batumi.info@hilton.com Address: 40 Rustaveli Avenue 6010,Batumi,Georgia batumi.hilton.com

For advertising please contact: 558 03 03 03 marketing@finchannel.com

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