Construction Materials Market in Georgia

Maka Ghaniashvili

International auditing company ‘Deloitte and Touche’ has studied Tbilisi real estate market. According to the company’s market overview, due to recent political events in Georgia (events of November 7, presidential and parliament elections) real estate market faced certain problems.

Although it was a temporary event and for the next few years Georgia will witness building and construction boom again. Current situation on the country’s real estate market proves it.
Real estate sector is one of fastest developing sectors of Georgian economy and is attracting substantial attention from international investors. A large number of new projects are expected to be completed in the next 2-3 years. Publicly announced projects by developers will more than double office, retail, warehouse and hotel stock in this period. In addition to the announced projects, there are a number of very large projects at an early planning stage. Prices for real estate have increased more than 4 times since 2003. However the supply of new stock will lead to much greater completion between landlords. The market is not fully developed yet. It concerns residential real estate, office premises, retail, warehouse and hotel stocks.
Residential Real Estate – Most of the existing residential stock was built between 1945 and 1985 and is not of good quality. Therefore more and more people are hoping to move from old soviet-style flats into new apartments and improve their living conditions. it makes us think that demand on residential real estate will continue to be high in the future.
Office Premises Tbilisi is far behind other Eastern European capitals in its office stock per capita and there are only four A class office premises in the city although current demand for high class office premises is higher than existing supply. Office space will almost double in next 2-3 years, although according to Deloitte and Touche it will still not correspond to demand.
Hotel Market – By 2010 Tbilisi is expected to have several high class hotels, but the number of rooms per capita will still be behind the desired figures, especially when we think of growing tourist boom in our county. More and more tourist visits Georgia from season to season. We need more hotels to receive them and to provide accommodation.
Retail Real Estate Market – The retail sector of the real estate market in Tbilisi as well as in other big cities of Georgia is seeing major switches from old open markets and bazaars to modern shopping centers and supermarkets. This tendency will be kept in the future too. In the next 3-4 years Tbilisi will have at least an additional 150,000 m2 of shopping center space. This compares to current stock which is in the 60,000-80,000 m2 range. As a result, Tbilisi will have a higher retail stock per 1000 residents by 2010 than Kiev or Bucharest has today.
As we can see from the above mentioned, according to Deloitte and Touche overview Georgia’s real estate market will be quite active in the future too, but we need to do and to build a lot in order to develop the market fully.
What do construction companies in Georgia offer their customers and what type of construction materials are presented on market?
13th international fair for Building and Interiors and 2nd international fair for building technique was arranged on May 21-24 at exhibition centre ExpoGeorgia. 17 countries presented their production at the exhibition, including: Austria, Germany, Turkey, Japan, Italy, Latvia, Ukraine, Russia, France and Finland. More than 250 companies were presented on 140 exhibition stands offering customers various types of production and services, namely: wide range of construction materials and interior – paints, bathrooms, Jacuzzis, sanitary technique, warming and condition systems, lightening and electric equipment, doors and windows, parquet, bars, different kinds of construction techniques, trucks, etc.
As we have already mentioned, we will concentrate on construction materials more and we will try to show what do companies working in this sphere offer to customers.
Maxsit Group (Maxit Oy Ab) – building materials. maxit is known for over 100 years as the leading manufacturer of modern, reliable and inexpensive dry-mix mortars. It is also a large and traditional producer of lightweight aggregate and blocks thereof. Maxit is a part of Maxit Group that owns factories in more than ten countries (Finland, Russia, Belorussia, Ukraine, Kazakhstan, Uzbekistan, Azerbaijan, Georgia etc). the group also has dealers and retail sellers all over the world. Maxit Group goes into ‘Haidelberger cement ag’ concern. Nearly 5,000 employees contribute to annual turnover of EUR 1 billion. The customers can choose the most suitable solution for his needs from a very wide range of carefully tested, secure and easy-to-apply materials. The products are an excellent choice as well for new construction projects as for renovation objects and they are equally suitable to be used with both traditional and modern methods. The high quality has been guaranteed by the long-term investments in product development. Besides production of Vetonot, Serpo, Deitermanis go into Maxit group. Vetonit plasters, screeds, tile fixes and grouts are basic products for modern construction. Materials are carefully tested, thus making them reliable and long-lasting choice for a wide variety of construction projects.
Maxit is a leading company in the world manufacturing dry-mix mortars and lightweight aggregate products. The company’s goods enable customers to save time and energy. Vetonit products guarantees best results, because needs are different for example for substrates, application thicknesses and finishing materials. All products are delivered in dry-mix.
Matrix Group also offers SEPRO products that have a wide range of renders and coatings, which offer solutions as well for new building constructions as for renovation objects. The solutions are suitable to be used with traditional products and methods or in modern pumping techniques.
Besides the above mentioned products Matrix offers its customers cement and synthetic materials for hydro isolation. These materials are used for bathrooms, basements of buildings, warehouses, pools and drinking water reservoir hydro isolation.
Saba and Company offers wide range of services including building materials – marble, Glazed tile, terracotta floor-tiles, paints, trim stones etc. the products are mainly produced in Italy. According to developer of Saba Group Davit Shavtashvili:’ the company mainly imports building materials from abroad. We use pure German gauges by company Faschal. We import materials, elevators and electric appliances. The latter is mainly imported from Ukraine and Belorussia’.
GEORGIAN ALCON-TRADE Ltd is official representative of U-kon Engineering. U-kon system presents U-Kon engineering products and is produced in Russia, Ukraine, Kazakhstan and Germany. U-kon range of modification makes the following products available: compositional panels, metal bars, flat panels, ceramic granites, natural stones. Products of Georgian Alcon trade are currently imported but according to the company’s director Slava Burduli, they will soon bring special equipment from China and will stars manufacturing aluminum in Georgia soon. Knauf Marketing Tbilisi Ltd is a Knauf representation in Georgia and imports gyps cardboards, cement and plaster ready mixtures. As a sales manager of the company, Levan Japaridze mentioned: ‘this segment of market develops little by little, although in comparison with growing demand, supply is not adequate. In spite of several new companies appearing on market, competition is not as strong as that’.
Another Turkish – Georgian company producing the same types of goods is ‘V.M. Georgia – Ordiex’. It has been functioning since 2006. Major field of the company’s activity is manufacturing building and reconstruction materials from dry admixtures. Materials for manufacturing is imported from Turkey, Spain, Gemrany and Switzerland.
Company Alpa Geo has been a distributor and seller of French and Austrian revetment materials for 10 years. The company imports various types of goods, namely cement form Austrian company ARDEX that has entered Georgian market 2 months ago. Besides they offer hydro isolation for all types of works, parquet sticks, as well as production of French company ALPA.
Gonio Ltd has been an official distributor of SIKA company in Georgia for 3 years. Sika is a global company with a total of almost 90 production and marketing companies in more than 70 countries. Sika is active in the field of specialty chemicals dividing its activities into two business areas. Since 1910 SIKA production has been applied while constructing tunnels, bridges, hydro technical buildings, industrial buildings, business centers, housing, parking etc. production range covers all stages of construction, beginning from basic ending with roofing.
Demand on ecologically celan products increases in Georgia as well as all over the world. Company Pica Geo representing Italian Industrie Pica spa in Georgia and in Caucasus offers these type of products to customers on market. Industrie Pica spa was established in 1930 and is the largest manufacturer of clay in Europe. It owns 3 factories and 6 industries. The following are Pica production: roof tiles, facing bricks, flooring. Production is made by means of modern technologies, Experience, carefully selected raw materials and cutting-edge technology make PICA. As company manager David Mosidze mentioned:’ Society has come to a conclusion that they need ecologically clean products and starts using tile and bricks again. These products are widely used in Europe and all over the world. Its worth mentioning that Georgia applied tile and bricks long time ago. We have been importing these products to Georgia and I should mention that market is extending little by little and demand on tiles and bricks increases.’
Georgian enterprises that mine and process natural stones offer ecologically clean products to customers. These companies are: ‘Standard Stone’, ‘Stone Art’ and ‘Kamara’. The companies mine natural stones in different regions of Georgia. Besides the above mentioned companies other Georgian companies participated in the exhibition, such as ‘Interplast’ – established in 2007, the company’s factories occupy 7 hectares in suburb of Tbilisi (Didi Lilo). The company’s products cover: water system pipes, Sewer pipe, PVC door-windows, laminated parquetry, PVC Panels, Metal Tile, Sandwich Panels, Blocks, Foam plastics, Foam rubbers.
In October 2007 Interplast was issued ISO 9001:2000 certificate. As the manager of marketing division Diana Kardava mentioned: ‘ the company exports to Armenia,. Ukraine is quite interested in production, as well as Azerbaijan and Kazakhstan. Georgian production will soon enter their markets.’
Another Georgian company ABCD Group was presented at the exhibition. The company offers wide range of services to customers: planning and building works, production of construction and facing materials etc. the company offers innovation to customers – special system that allows cooling down the temperature. It is widely used in cafés, restaurants, terraces, beaches and resting areas as well as agriculture, green-houses, farms and many other purposes. Another innovation introduced by ABCD Group in Georgian market is OSB tiles created by means of the newest technologies. It is a natural wood product. According to the company, OSB is a better wood material and is more flexible, more solid and has no defects.