Levan Varshalomidze, Chairman of the Government of the Autonomous Republic of Ajara

Batumi, the capital city of Ajara, an autonomous republic of Georgia, is situated on the coast of the Black Sea just 3 kilometers from Turkey. With a population in excess of 170,000, the city has been undergoing rapid development in recent years. Real Estate Publishers (REP) interviewed Levan Varshalomidze, Chairman of the Government of the Autonomous Republic of Ajara, to find out what’s happening and what’s on the horizon.

Batumi is undergoing rapid development. What are some of the more important projects recently completed?

Among completed projects I would mention first the projects that, in a miraculous way, have improved our tourist infrastructure and the appearance of Batumi itself. These are two five-star hotels: the Intourist Palace and the Sheraton, Batumi Piazza, which is a very beautiful project of Italian style architecture. Other important recent projects include the Batumi Plaza, a commercial and residential building, and the Georgia Palace Hotel, a five-star hotel in Kobuleti. Also I should mention the Radisson Hotel, the Boutique Hotel, the Batumi Dolphinarium, and the Palace of Justice. Batumi Boulevard was recently expanded considerably with various alleys, exotic trees, ‘singing’ and ‘dancing’ fountains, making the night-time in Batumi colorful and exciting. I should also add the Tsitsinatela Amusement Park near Kobuleti, which is a favorite place for kids and young people. Another very special project completed recently was the renovation of the old city part of Batumi. There are a lot of new attractive places for entertainment as well: very nice restaurants, casinos, cafes and night clubs that make a visit to Batumi an unforgettable adventure. The renovation of the Batumi Botanic Gardens, which is one of the biggest in the world, and the creation of four protected areas around Batumi with unique nature contribute to the attractiveness of the region.

To what do you attribute this success?

The success can mainly be attributed to Batumi’s rapidly growing hospitality market. An increasing number of visitors has resulted in high demand for accommodation and entertainment facilities. Recent reforms that took place in Georgia – transparent and equal conditions and incentives for business development, and support of the central and regional governments – have also created a more desirable climate for the initiation and accomplishment of new projects. For example, an investor that builds a hotel with at least 100 rooms acquires a casino license free-of-charge for 10 years. The attractiveness of the city as a favorable place to invest, live and work has led to the rapid expansion of the city and urbanization. This additionally contributed to the creation of more investment opportunities in property markets. The total investment potential of the region is estimated at several billion US dollars with investment opportunities in diverse economic sectors.

What kinds of projects are now in the confirmed pipeline?

Various kinds of projects are in the confirmed pipeline. Among them are the rehabilitation of the city’s historical districts, reconstruction of the conservatory and opera house with a brand new design, the development of a ski resort and mountain recreational zones in Ajara, construction of various shopping centers and a football stadium, Batumi Aquarium, Argo Entertainment Center, which will be connected to Batumi by a rope road, the Princess Hotel, Batumi Alphabetic Tower, some sophisticated residential buildings and internationally recognized brand hotels such as Kempinski, Hilton, Ritz Carlton, Holiday Inn-Belle Vue, Conrad-Cubic Tower Hotel, and Marriott-Semiramida Gardens. Some of these projects were designed by famous architects, such as a the Spanish architect Alberto Domingo Cabo.

Hotels and hospitality represent a large part of new property development. What is the situation with logistics?

For the last five years, transport infrastructure has undergone rapid development throughout the country, especially in Batumi. We have built a new Batumi International Airport that serves flights to and from several cities in Ukraine, Turkey, Azerbaijan, Armenia and Belarus. We expect that some new flights will appear in the near future. New railway stations with passenger terminals were built in Batumi and Kobuleti with links to railways of Armenia and Azerbaijan. Moreover, a new railroad will be constructed connecting with Turkey’s railway and eventually to Europe in the coming years. As for transportation by the sea, the number of passengers doubled in 2010 compared to last year. Ferries from Ukraine and Russia regularly come to Batumi. More and more cruise ships visit the city. The new international highway is currently under construction.

How important is foreign investment for Batumi’s real estate sector? Where does most of the cross-border investment come from?

Foreign investments contribute substantially to our real estate development. They help the city grow faster. Even during the financial hardship of 2008-2009 construction projects in Batumi were mostly not hampered and real estate prices were stable. Most of the foreign investment comes from our neighboring countries and from Turkey in particular. We do have some investments from western countries though. We know that Donald Trump expressed his interest in investing in Batumi’s real estate.

Why should foreign investors consider investing in Batumi?

I think there are several reasons why Batumi is becoming more and more attractive for foreign investors. I will begin with location. Batumi is a port city on the Black Sea coast so this attracts a lot of trade and tourism activities. Even in the old times this place was on the crossroads to the ancient Silk Road that connected Asia and Europe. And today Batumi is a kind of bridge connecting several important world economic powers with more than a billion people, including the European Union, CIS countries, Turkey and Asian countries.

Batumi Aquarium Batumi Aquarium

Another important reason is the investor-friendly environment that we’ve created in recent years. And it remains our goal to facilitate investment activities in Batumi and other cities and regions of Georgia. The safety and promotion of investments is secured in Georgia by the 'Law on Investment Activities and Guarantees'. There are no restrictions on ownership of foreign companies in Georgia.

We have a liberal trade regime: the second lowest in the world on import tariffs, streamlined border clearance procedures and preferential trade regimes such as MFN treatment with WTO members, GSP with the US, Canada, Switzerland, Norway and Japan, GSP+ with the EU and Turkey, Free Trade Agreements with CIS countries (except Russia) and Turkey, investment protection agreements and double taxation avoidance agreements with various countries. Such trade policy makes Batumi and the whole of Georgia an attractive production platform to serve diverse markets. The Georgian Government is actively cooperating with the EU and the USA to encourage negotiations and conclusion of free trade agreements.

Georgia has low and simplified taxes. In 2005 we introduced significant procedural and institutional innovations. Importantly, the simplification of tax legislation and the formation of stable and sustainable tax environment is a continuous process that brings our country in line with best international practices.

We also have a comparatively cheap and competitive labor force. Batumi offers highly qualified and skilled personnel for all kinds of investments in diverse economic sectors. According to UNDP Human Development Report, Georgia was rated as having leading adult literacy rate. At the same time, the Heritage Foundation rated Georgia as the country having the most liberal labor code worldwide. Very soon the Georgian Government is going to establish a new International Technological University in Batumi with support from foreign donors.

Our region has a rich diversity of natural resources, particularly subtropical agriculture, huge forest areas and abundance of fresh water and hydro-mineral deposits. Since ancient times Georgia has preserved its unique culture and traditions. So the traditional hospitality of the people, warm climate of the city and beautiful landscapes make Batumi an attractive place to live and work. You are welcome in Batumi!

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