BAKU, Azerbaijan, August 22. Georgia’s construction costs increased in June 2026, while the residential property market continues to show stable demand supported by domestic customers, urbanization and investment returns.
According to the National Statistics Office of Georgia (Geostat), the Construction Cost Index (CCI) increased by 0.9% month-on-month in June and by 3.9% year-on-year.
The annual increase was mainly driven by higher costs of transportation, fuel and electricity, which rose by 16.6% and contributed 1.9 percentage points to the overall index growth. Average monthly nominal wages in the construction sector increased by 1.8% year-on-year, adding another 1.01%age point to the index. Compared with February 2022, the Construction Cost Index has increased by 29.3%.
The residential construction segment recorded stronger monthly growth than other categories, with its index rising 2.6% compared with May and 3.5% year-on-year. The civil construction segment increased 5.8% annually, while the non-residential segment declined 0.1% compared with June 2025.
Despite higher construction costs, Georgia’s residential property market continues to demonstrate stable fundamentals, Galt & Taggart, an investment banking arm of Lion Finance Group, told Trend in an exclusive comment. "Price growth has stabilized. Based on our analysis, primary market prices rose by 6.1% year-on-year in May. We expect price growth to remain within 5-7% year-on-year, supported by stable fundamental demand, backed by growing urbanization, declining household size, rising incomes and attractive investment returns," the company said.
According to Galt & Taggart, the current market cycle differs from the rapid price increases observed in previous years, with demand increasingly driven by structural factors rather than temporary external shocks. The company noted that local buyers remain the main source of residential demand in Tbilisi. Georgian buyers accounted for 76% of surveyed primary market sales in the capital in 2026, while Israeli buyers accounted for 11% and Russian buyers for 3%.
In Batumi, the buyer structure is more diversified, with Georgian buyers accounting for 37% of surveyed primary sales, followed by European buyers at 18%, Ukraine-Russia-Belarus buyers at 16% and Israeli buyers at 10%.
Galt & Taggart also highlighted the continued attractiveness of the rental market. Tbilisi’s gross rental yield stood at 8.4% in May 2026, broadly in line with its long-term average of around 8-9%, while average rents stabilized at around $10 per square meter.
Earlier, Geostat reported that Georgia’s Residential Property Price Index increased by 4.9% year-on-year in the second quarter of 2026, with prices reaching 63.8% above the 2020 average. Trend’s analysis shows that Georgia’s residential market is entering a more mature phase after the sharp price acceleration of 2022-2023. While construction costs continue to rise, the pace is significantly more moderate than during the previous period of rapid market adjustment.
The 3.9% annual increase in construction costs remains below the price growth rates recorded during the post-2022 demand surge, indicating that developers are operating in a more predictable cost environment. At the same time, the combination of higher construction costs and stable housing demand is supporting continued price growth, although at a more sustainable pace. Trend’s calculations show that Tbilisi’s new-build residential prices have increased by approximately 63.8% since 2020, equivalent to average annual growth of about 8.6%. The changing buyer structure is also significant. The limited share of Russian buyers in primary sales indicates that the market has moved beyond the migration-driven demand shock seen after 2022. Current demand is increasingly linked to domestic purchasing power, investment returns, and long-term urban development trends.
