David Kezerashvili spurs on real estate innovation despite restrictive policies

Over the past decade, Georgia has shown a long-term trend towards the growth of its real-estate market. There’s no question that there’s great potential there, but these current trends come despite significant government interferences. We spoke with former Georgian Minister of Defense and current real estate developer David Kezerashvili to find out how the government is holding real estate back and how his latest projects are flourishing despite that interference.

Real Estate in transition economies

Like most former constituent nations of the Soviet Union, Georgia is still facing the challenge of transitioning its economy decades later. These matters are further complicated politically by ongoing interference from Russia on multiple fronts. Georgia does not have a practical framework in place for how the government interacts with the real estate market, and the absence of clear rules leads to unjust interference.

Kezerashvili says, “Wherever a proper legal framework is absent, the government finds opportunities to interfere. Where most might imagine that a lack of concrete regulation would give significant opportunities to developers, the real estate market is instead governed by the whims of officials across multiple levels of government.”

Moving forward, Kezerashvili hopes that the government of Georgia will adopt the principle of minimum necessary function, where government function is minimized to essential interventions, and developers are given greater control and freedom. The vestiges of Soviet policies remain today and continue to restrict development, with a complete shift in principles necessary for the real estate market to see positive change.

Housing in Georgia

Housing is one of the major real-estate market segments that has undeveloped potential in Georgia. Across the country, many residents continue to live in Soviet-era buildings that do not meet today’s standards.

Kezerashvili explains that “Government interference restricts the construction of new housing in our cities. While so many residents remain in dilapidated Soviet buildings, the government holds back the flow of new development that is clearly called for by economic trends in the real estate market”.

A major constituent of these restrictions is the failure of the Georgian government to delineate and assign authority and duties within the levels of government. Without a clear framework that specifies which departments control which aspects of housing and development, many different departments stake that claim. Developers often receive contradictory information and instructions from national, regional, and local governments.

The problems caused by these oversights at the highest level continue to worsen day by day. Older buildings continue to crumble, driving prices higher as the housing supply fails to grow. As a result, residents are paying more for properties and rent without receiving any value in return.

Vake Plaza

Despite inefficient and intrusive government policies, there is still some innovation moving forward in the Georgian real estate market. Kezerashvili is behind one of the latest architectural projects in Tbilisi, Vake Plaza. The plaza serves as a modern business center to meet the needs of the city’s expanding entrepreneurial base. Its bold design is unmistakably modern and emphasizes the role it plays in providing entrepreneurs with access to the latest technology for undertaking their business.

The distinct style of the 22,000 square meter plaza stands out at its prominent location near the Liberty Bank. However, many of the most important features are inside. The plaza offers state-of-the-art offices for businesses. It incorporates the latest safety design features such as an uninterruptible power supply and advanced fire safety systems. There is also extensive underground parking, a critical feature in a city that faces a major parking shortage.

Why Tbilisi?

We spoke with Kezerashvili to get a better understanding as to why he has chosen Tbilisi for his ambitious architectural project. Being the capital of his native Georgia and the place of his birth, Tbilisi obviously has strong personal ties for him. However, he explains that there is more behind his decision to implement the bold new architecture in his latest project.

Kezerashvili tells us, “The rich architectural history of Tbilisi can be seen everywhere in its Armenian, Byzantine, and Hausmann influences. However, we still see today the stifling effect of the Soviet era on innovation and ambition, and architecture. Through the Vake Plaza and other modern developments, Tbilisi is beginning to reclaim its architectural heritage.”

The path forward

The drastic change will be necessary to allow real estate in Georgia to flourish as it should. The market stands poised to usher in a new wave of innovation, modernizing the largely outdated housing and commercial real estate of Georgia. The government must recognize this and establish policies that will aid and stimulate growth rather than stifling it.

These new facilities will help breathe new life into Georgia, affecting innovation across numerous industries. Higher quality of life, greater energy efficiency, and more will benefit citizens when they have modern homes and businesses rather than their current Soviet remnants.

“The interests of Government officials will soon enough find themselves rightly subsidiary to the natural market forces that are driving innovation in architecture and real estate. There is no dispute that the citizens of Georgia are calling for modernization and innovation in housing and development.” – David Kezerashvili