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CARTOON
DISPATCH

From
Central Asia
-Ted Rall

PHOTO ESSAYS

BUSINESS &
ECONOMICS

IN TBILISI, IT’S BOOM
TIME FOR BUILDING
Text by
Diana Petriashvili; Photos by Alexander
Klimchuk
6/15/07

The cranes hanging over the steel frame of
the once shoddy Hotel Iveria in downtown Tbilisi
say it all. With limited attention to
regulations and earthquake risks, Georgia’s
capital city is rebuilding itself, and city
officials say that the construction boom has
only started.

Hotel deals have grabbed the headlines. Aside
from the $100 million Radisson Hotel project
which will open in 2008 in the shell of the
Iveria, an ex-Intourist Hotel that doubled for
years as a refugee shelter, work has also
started on a $200 million Park Hyatt project,
due for completion in 2009. The Kempinsky and
Intercontinental chains have also announced
plans for hotels, and the central government has
reportedly held talks with Hilton Hotels as
well.

The government puts it down to growing
international interest in Georgia given its
rapid pace of reform and steady rate of economic
growth. A recent International Monetary Fund
mission estimated Georgia’s 2006 growth at well
over 9 percent and estimated that 2007 could see
minimum growth rates of 10 percent.

Within the city government, officials say
that they see no end in sight for the Georgian
capital’s construction boom, and concede that
the building frenzy could well change the city’s
look. Outdated zoning laws mean that little
legal basis exists for managing the building
frenzy, though city government representatives
contend that they are in fact controlling the
process.

Papuna Dzidziguri, a city urban planning
expert who is working on Tbilisi’s general
construction development plan, believes that the
concentration of construction work in the city
center is likely to cause serious problems in
the near future.

"The center is not capable of handling the
burden of too much construction," Dzidziguri
said in an April interview with EurasiaNet.
Traffic congestion and changes to the capital’s
historical buildings are among the concerns, he
said. "It’s now very important to find a new
space for all the construction that is expected
in Tbilisi. Otherwise, the new buildings will
completely change the unique look of the old
central parts of the city."

Zoning laws, introduced in 1970, expired in
2000, Dzidziguri said, although the city
continues to use them. Work is continuing on new
regulations, he said, citing one that puts a
three-storey cap on new buildings in certain
parts of old Tbilisi.

An overall construction development plan for
the city is expected to come into force by the
end of 2007. But how to balance investor demand
with preservation concerns is a topic no
official has mastered yet.

Alexander Jobava, head of city planning for
Tbilisi, states that the municipal government
would like to encourage investors to build new
apartment buildings 10 to 15 kilometers outside
of town rather than in the city center, where
space is relatively tight. Achieving this goal
will be difficult, though, he added, in the face
of "serious demand" for apartments near the
center.

According to economic development ministry
officials, Arab businessmen plan to invest as
much as $200 million in construction of elite
residential complexes in Tabakhmela and
Tsavkisi, two areas located close to the Tbilisi
center. Next to the Arab project, Israeli
investors plan to spend some $100 million on the
construction of a dozen luxury town houses, said
a source in the Tbilisi city government, who
asked not to be named. Another significant
investment is expected by Korean investors on
Elia Mountain, a less populated area within
walking distance of Tbilisi’s historic center,
the source said.

The city government states that there are
some 30 construction companies now operating in
Tbilisi, a city of about some 1.5 million
people.

"The number of companies continues to grow as
construction is a very profitable business in
Georgia," city urban planner Dzidziguri said.
"There are certain companies that change their
profile and switch to construction."

According to the Georgian state department of
statistics, the country’s construction sector
brought in 1.61 billion lari (about $961.481
million) in turnover in 2006, while in 2001 it
was only 243 million lari (about $145 million).

Meanwhile, prices for the new apartment
buildings built by these companies continue to
soar. Prices for under-construction apartments
range from $400 per square meter for an
apartment in the outskirts to $2000 per square
meter for an apartment in the center of town. By
comparison, Georgia’s per capita gross national
income in 2005 was estimated at $1,320,
according to the World Bank.

One former architect believes that the prices
reflect the fact that demand is limited to the
richest Georgians, who have far fewer restraints
on their budgets than most ordinary citizens.

"Georgian society is comprised of two major
groups: very rich people and very poor people.
The construction market is oriented toward those
who are rich, and who are paying [for
apartments] today," said Zviad Zarandia, an
independent expert.

The city government has presented the work
done on updating Tbilisi – including a
controversial plan to tax residents of historic
districts to fund infrastructure reconstruction
projects – as intended to inspire Tbilisi’s
residents to take pride in their city once
again.

While pride is taken in some of the parks for
children, street lighting, road improvements and
painting, not all residents, though, are upbeat
about the transformations.

Mariam Papunashvili, a resident of one
Tbilisi district where large-scale construction
is going on, claims that vibrations from heavy
trucks passing on the road outside her house all
day have undermined her building’s structure.
The district’s new buildings are surrounded by
houses badly damaged from a 2002 earthquake.
Homeowners have given their land to builders in
exchange for new apartments.

"I was told that they will not complete these
buildings under construction until 2009. I will
simply lose my house by then," Papunashvili
worried.

One woman in the central neighborhood of
Mtatsminda takes a different approach.

"They can build all they want to," she said,
pointing to the skeleton of a hotel-apartment
complex wedged between a church and a hotel on a
ridge overlooking Tbilisi’s downtown. "But they
need to understand that what goes up in this
town can most definitely come down."

Editor’s Note: Diana Petriashvili is a
freelance journalist based in Tbilisi. Elizabeth
Owen, EurasiaNet’s Caucasus News Editor in
Tbilisi, added reporting to this story.

Editor’s Note: Diana Petriashvili is a
freelance business and political reporter in
Tbilisi. Alexander Klimchuk is a freelance
photographer also based in
Tbilisi.

click here for a map of
Georgia

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