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How to open an account in Cartu Bank Georgia ?
- Thread starter Remy
- Start date
Haha, but the same you can say about the biggest banks in Georgia.
From the financial numbers, non performing loans and cash reserves even the best banks in Cyprus combined (they are actually all really bad when looking close at them) are not even close to a e.g. a Bank of Georgia or a TBC.
For Georgia, the troubles are still ahead. I am referring to Batumi real estate bubble and mortgage lending associated with it. No way it can be sustained.
They situation in Cyprus is better, but not by much. It seems every time I drive past Limassol, a new high-riser or two is under construction. The growth seems to rest on artificially low interest rates and the citizenship by investment program for HNWIs. That is a shaky ground. Already Brexit could do real damage, if the amount of British tourists drops.
They situation in Cyprus is better, but not by much. It seems every time I drive past Limassol, a new high-riser or two is under construction. The growth seems to rest on artificially low interest rates and the citizenship by investment program for HNWIs. That is a shaky ground. Already Brexit could do real damage, if the amount of British tourists drops.
There's no sign of bubble in Georgia so far. Mortgages regulation has changed thisnyear that slowed down both growth of constructions and growthbof mortgages. You can read very good report on this deliverd by TBC Capital research team. Its public and free
I am not talking about Georgia as a whole, only Batumi. Also, the bubble in Batumi is not so much in prices, but in the amount of new construction. In 2018, 665,000 M2 was sold. During the same year, new construction permits were issued for 648,000 M2. Projects under development: 1,253,000 M2 (Q1/2019). There is so much new construction that the market can not possibly absorb it all. The above figures are from TBC's "Residential Real Estate Sector: Batumi" report (pdf).
According to the same report, "66% of buyers acquire apartments in Batumi for rental cash flow.". While the Batumi boulevard is packed during the summer months, with this amount of new construction, I don't think the idea of buying for rental cash flow will last long. The Black Sea tourist season lasts only for 4-5 months. Outside this period, the occupancy rate for these buildings is very low. It is the same in Sunny Beach and Golden Sands in Bulgaria outside the tourist season.
Already now in Batumi you can see many unfinished high-risers. For example, Orbi Sea Towers is still not finished, yet the company has moved on to new, bigger projects. The Batumi Tower, finished in 2012, is still empty. Builders promised shops, restaurants, gyms, underground parking places, but they didn't appear. An why would they? I assume the builders would already have curtailed new building if their projects were done strictly on economic basis.
I have no dog in this fight. In fact, I think tourism to Georgia will increase, and for a good reason. Georgia is worth visiting. I just think in Batumi they have gotten a bit ahead of themselves.
Interesting... My opinion was that people investing in places like Cyprus are mostly rich Russians who use it for residency purposes or just to get money out of the country. And in that case, they do not need a mortgage and it they take one, they just do it for the leverage benefit and there isn't a giant risk of them defaulting on the loan...
Everything nowadays somehow "rests on artifically low interest rates" so I don't see the situation in Cyprus very different than in e.g. Denmark or Sweden. I agree that many new owners of these beach resort apartments will be disappointed when they realize they can rent it on Airbnb for 2 months out of the entire year.
Many parts of the economy are fragile, Thomas Cook the british travel agency declared bankrupcy and over 500 hotels in Mallorca and other Spanish islands will possibly have to close down this year or next year. It is ridiculous overall and even more ridiculous in the eurozone.
That is correct.
After thinking through this once more, it seems I can not make a clear case for a bubble. I'll just list some random thoughts FWIW:
- In general to me Cyprus seems a bit overpriced in real estate, especially considering the ailing construction quality & other stuff. Limassol seafront is being filled with very expensive skyscrapers that will remain mostly empty. Is this a problem? I don't know, but the business case for those buildings rests solely on the citizenship program, which is rumored to soon get competition from Greece.
- In terms of square meters, Cyprus construction grew from last year over 45% (july figures). Cyprus isn't fully recoverd from 2012-13 financial crisis, yet construction grows again at a pace that would indicate a bubble. My barber is in real estate business, which usually is a sure sign.
- In the future, drilling natural gas could be a significant support for the economy. Or the situation could get out of hand, as Turkey wants to (steal) its share.
- Thomas Cook bankruptcy can be seen in air fares in Cyprus. Right now, non-UK air fares that used to be 50-100 EUR, are more like 300 EUR or completely unavailable.
