On the current market, in development projects, the total cost of a standard one-bedroom apartment averages around $58,300. These apartments typically have an area of about 53-58 square meters, and a significant portion of that space—10 to 13 square meters—is occupied by balconies. Since balconies and indoor living spaces are priced equally per square meter, balconies of this size considerably increase the cost of the apartments. It’s also worth noting that due to their narrow size (maximum 1.5 meters), balconies often remain unused or are repurposed as storage. In the East Project, the average price of a one-bedroom apartment is $43,160, which is $15,140 less than the market average. The indoor area of these apartments is 29.9 square meters, and the balconies are 6.6 square meters (with a width of 2.2 meters). The total area of the apartment is 36.5 square meters. The lower total cost is due not only to the smaller size but also to the fact that the balconies are priced at only half the rate per square meter compared to the interior space.

In the case of our apartments for investment, these figures are significantly lower:

The provided tables discuss two scenarios. In the first case, the amount to be covered through internal mortgage installments is spread evenly over the period until the project is completed. In the second case, payments begin with a 10% initial down payment. It is clear that in both cases, there is at least a $150 difference between standard apartments and ours. When evaluating investment apartments, this difference is critically important.

When purchasing a rental property, the goal is to cover the mortgage payments with monthly rental income. Ideally, rent should exceed monthly payments, but considering market trends and current prices, this result may not always be achievable. Today, the average asking price for rent in the Varketili district is $380 for one-bedroom apartments. These apartments, as mentioned above, are over 50m2 on average. However, it is important to note that the rental price depends less on the apartment’s size and more on its functional features. Therefore, our apartments—despite being 10–15 square meters smaller than other one-bedroom units—should be rented at the same total price due to their functional layout and efficient use of space. Even if the apartment is not initially very profitable on a monthly basis, the investment will not be considered unsuccessful, since, in the case of a right investment, its value should significantly increase over the years. As a result, at some point, it would also be highly profitable for resale. Several factors determine a sound investment, and one of the most important among them is location. Real estate prices are constantly rising, but the rate of growth varies according to the location. In already densely populated and central areas, property value increases at a much smaller annual percentage than in newly developing residential zones that are currently being populated. Assuming a 5% annual increase in such areas, the value of our apartments should grow by approximately $2,280 per year.

From the completion of the project (end of construction) to the point of renting out the apartment, there is naturally a renovation period, which by itself will not be profitable and is also associated with additional expenses. Accordingly, it is interesting to know what tools can be used during this period to reduce costs and to have benefits on monthly payments. Through the subsidized mortgage loan program, the loan interest rate can be subsidized at the refinancing rate minus 1.5%, not exceeding 8%, if the property is intended for rental purposes and the borrower meets the program’s requirements.:

• You have 3 or more underage children, and one of them is under 1 year old
• You have 3 or more underage children, and one of them has been adopted (as a minor) after September 1, 2021
• You are already benefiting from the subsidy program, have 4 or more underage children, and one of them was born or adopted (as a minor) after September 1, 2022

With this program, the loan interest is subsidized for the first 60 months, significantly reducing the monthly bank payments during that period. This means that at the very time when no income is yet being generated from the purchased apartment, it is possible to further reduce expenses—making the investment more affordable overall.

As shown in this table, if you benefit from a subsidized mortgage (assuming an average 4% subsidy), the monthly payment for our investment in a one-bedroom apartment will drop to $256 during the first five years. This is a significant advantage both during the renovation period and in the first few years of profitable renting, during which rental prices will naturally increase. For detailed information about this program, please visit the following links:

• Bank of Georgia
• TBC Bank

In Tbilisi, apartments with a closed bedroom on the economy market typically range from 45m² to 60m². The majority of these apartments fall within the 50-58m² range, while there is little demand for one-bedroom apartments larger than 60m². Notably, 90% of the apartments developed by builders in Tbilisi share the same internal layout. The cost-efficiency approach, aimed at maximizing expenses, often leads to the creation of similar products in the market. As a result, the primary differentiator between apartments in this range is the size of the balcony, with space and price differences usually determined by this factor. It is important to note that research indicates a high demand for smaller balconies, as they significantly impact the price and increase the overall value of the apartment. This occurs because the value of a balcony per square meter is the same as that of the interior space. However, the standard depth of a balcony (distance from the facade) does not exceed 1.5m, making it non-functional regardless of the apartment’s size. As such, it is impossible to host guests, have breakfast, or engage in other activities on these small balconies.

Figure 1 Standard One Bedroom – Living Space – 41.4m2/ Balcony – 11.5m2

Figure 1 shows a standard layout of a one-bedroom apartment. These types of apartments typically feature two naturally lit areas — the bedroom and the living room — while the kitchen and bathroom are positioned along the wall adjacent to the building’s corridor. The balcony also has a standard depth and is usually fitted with a heating unit.

Currently, there is significant demand for apartments in older buildings, particularly Soviet-era projects such as the Kruschov Projects and others. This demand is mainly driven by the relatively smaller total area of these apartments and the distinct layout solutions they offer compared to modern developments.

To better understand the functional areas that can be improved in today’s standard apartments, it is useful to review how developers in the European market approach similar products. One particularly interesting trend in the European market is the treatment of kitchen and dining spaces. In most cases, apartment layouts are designed so that the kitchen is positioned as close to the facade as possible and, when feasible, separated from other areas.

In situations where the depth of the apartment prevents the kitchen from being located along the facade — and therefore from being fully enclosed — its design is adapted to create a sense of a distinct, closed-off space.

The study of the European market clearly highlights the importance of separating the kitchen from the rest of the living spaces. However, its placement is largely determined by the apartment’s depth, which often makes it impossible to enclose the kitchen unless it’s positioned along the facade. Interestingly, even when full enclosure isn’t possible, the kitchen is often visually “isolated” by giving it an L- or U-shaped layout. Figures 3 & 4 are examples from the London development market that demonstrate this approach to overcoming depth limitations. It’s also notable that in both of these layouts, the dining table is not placed against the wall, making the space more accommodating—something that is rarely seen in the Tbilisi market. Even more extreme approaches to kitchen layout can be found in the Ukrainian market. There, even in small apartments where all three zones (bedroom, kitchen, and living room) cannot fit along the facade, the kitchen is still enclosed, while the second space combines both sleeping and living functions.

As revealed through foreign market research, there are several key differences compared to the product currently available in Tbilisi, with many improved features emerging:

• There is a clear need to provide the kitchen with natural lighting and, ideally, to separate it from other spaces.
• The dining table is given more importance and allocated more space within the apartment.
• Due to layout constraints, where possible, the living room becomes the most spacious area.
• Almost every bedroom includes a dedicated workspace, adding an extra functional layer to the room.

By considering these features, it becomes possible to create a more desirable and pleasant environment for any tenant. In turn, this directly impacts rental speed, consistency, and pricing.

As revealed through foreign market research, there are several key differences compared to the product currently available in Tbilisi, with many improved features emerging:

• There is a clear need to provide the kitchen with natural lighting and, ideally, to separate it from other spaces.
• The dining table is given more importance and allocated more space within the apartment.
• Due to layout constraints, where possible, the living room becomes the most spacious area.
• Almost every bedroom includes a dedicated workspace, adding an extra functional layer to the room.