Commercial Real Estate Investment in Batumi

The city attracts international capital thanks to liberal tax legislation and ease of doing business.
Demand for business real estate in Georgia is growing not only among local entrepreneurs. Major international companies are opening branches here, relocating entire departments of employees. This creates a sustainable demand for high-quality commercial space, which the current market is struggling to satisfy.

Furthermore, the commercial sector is less exposed to seasonal fluctuations than the residential market. Lease agreements here are signed for the long term—typically 3 to 5 years—guaranteeing the investor a stable cash flow without the constant need to find new tenants.

The Batumi market is not uniform. To ensure a return on investment (ROI), one must clearly understand which formats are in demand by tenants right now.

Street Retail

Ground-floor premises in high-footfall locations are a "prime asset." Properties in the Old Town and on busy streets in the New Boulevard district are particularly valued. Coffee shops, boutiques, pharmacies, and service centers are opening here. The liquidity of such assets remains at a maximum, even during economic downturns.

Class A and B Office Spaces

Batumi is experiencing an acute shortage of modern offices. Offices and commercial premises in the older building stock often fail to meet the requirements of IT companies: lack of parking, poor ventilation, or slow internet.

Investors funding modern business centers or converting spaces into coworking hubs are seeing queues of potential tenants even during the renovation phase.

Hospitality Business and Warehousing

Beyond classic offices, there is growing demand for small warehouses (for e-commerce) and turnkey hotel businesses. This is a more complex segment requiring professional property management, but yields here can exceed 12–15% per annum.

The average yield for residential real estate in Batumi hovers around 6–8% annually. Investments in commercial real estate demonstrate more attractive results—ranging from 10% to 14% with the correct property selection.

The average payback period for commercial premises is 7–9 years, which is an excellent indicator for the international market. It is also important to consider the capital appreciation of the asset itself: the price per square meter in Batumi’s high-traffic areas is steadily growing by 10–15% per year.

However, high returns always come with the need for deep analysis. A mistake in location by just 100 meters can drastically reduce foot traffic, turning a profitable asset into an illiquid one.

Many investors attempt to approach owners or developers directly, hoping to save on commission fees. In the commercial sector, this often leads to fatal errors.

1. Due Diligence & Legal Status. Commercial premises often have complex ownership histories, encumbrances, or illegal alterations. Sellers may fail to disclose that a building is slated for demolition under the city’s new master plan or has issues with power capacity connections.
2. True Market Value. Developers and owners always inflate expectations. Only an experienced agency, armed with statistics of actual transactions rather than "listing prices," can negotiate effectively and lower the property cost by 10–20%.
3. Potential Assessment. An agency analyzes pedestrian traffic, the competitive environment, and the district’s prospects for the next 5 years. We know where a new road will open tomorrow, and where construction might block a storefront view.