Construction business problems
By Messenger Staff
Tuesday, December 23The construction business had certain problems before the August war, as supply exceeded demand. Too many development companies appeared on the market and the number of customers they could attract was limited. The situation was tolerable though, more or less.
The war created extra problems and the world financial crisis has almost put the final nail into constructionís coffin. Banks have slowed down if not suspended issuing collateral loans/credits and made them more expensive. The results have been dramatic. Furthermore, at the beginning of November the National Bank of Georgia unexpectedly changed the GEL rate against the USD, thus creating a sense of instability in the country, another blow.
Experts think the situation will not change for better until the financial/banking system stabilizes. This might take 3-5 years. Most of the small developers have almost stopped functioning, though if they have good management they might not go bankrupt. The bigger companies have slowed down considerably, but real estate prices have so far not declined very significantly.