Real Estate 2026 Comparisons

The Civil Code of Georgia is the principal source of Georgian real estate law. Article 149 defines immovable property as a land plot together with its subsoil resources, the plants growing on it and the buildings and structures firmly standing on it. Book Two (Property Law) sets out a closed list (numerus clausus) of real rights – ownership, superficies, usufruct, servitude, pledge and mortgage – and the rules on their creation, transfer and extinction. Book Three (Law of Obligations) governs sale and purchase, lease and construction contracts.

Ownership cannot be created by contract alone: acquisition requires a transaction in written form and registration of the acquirer’s title in the Public Registry (Article 183(1)), established by the Law on the Public Registry and administered by the National Agency of Public Registry (NAPR), a legal entity of public law under the Ministry of Justice.

Other significant sources are the Organic Law on Ownership of Agricultural Land, which restricts foreign ownership of farmland; the Code on Spatial Planning, Architectural and Construction Activities, which governs planning, zoning, permitting and construction supervision; the Law on Entrepreneurs, which supplies the corporate vehicles used to hold real estate; the Tax Code; and the Law on Notary Actions.

Market Direction

Georgia’s real estate market has moved from strong post-pandemic growth into a calmer, more sustainable phase. Residential prices in Tbilisi rose around 3% year on year in early 2026, with similar growth forecast for the capital and a somewhat faster pace for Batumi. Tbilisi remains predominantly need-driven, led by owner-occupier demand, while Batumi is investor- and short-term-rental-driven, its short-let segment now showing early signs of supply outpacing demand.

Inflation and Interest Rates

Elevated interest rates have raised borrowing costs and increased the relative attractiveness of Lari bank financing over foreign-currency borrowing, without depressing overall activity; notably, the Lari has not been under depreciation pressure over the period, having strengthened modestly against the US dollar.

Significant Deals

The defining transaction is the Tbilisi Waterfront (Krtsanisi) and Gonio Yachts & Marina partnership between the Government of Georgia and Eagle Hills of Abu Dhabi – agreed by memorandum in January 2025, formalised in October 2025 joint-venture agreements worth over USD6.5 billion, with sales opening in early 2026. The state took a 33% stake in exchange for land rather than cash; deal terms are confidential.

Other Trends

Phased and pre-sale-funded residential development remains the dominant financing model for new-build residential, supplementing rather than replacing bank construction finance. Proptech and blockchain remain nascent, with tokenisation being explored but no statutory framework yet in place.

The residence-permit threshold and labour-migration changes discussed at 1.2 Main Market Trends and Deals are already in force rather than pending; the two genuinely pending reform threads are set out below.

First, amendments to the Code of Georgia on Spatial Planning, Architectural and Construction Activities have tightened municipal development controls in Tbilisi and Batumi – narrowing exemptions for unauthorised structures and creating dedicated pathways for urban renewal and for replacing structurally hazardous (avariuli) buildings. Implementation is still rolling out at municipal level, lengthening the pre-development planning phase and favouring well-capitalised operators able to absorb the stricter requirements.

Second, land registration reform continues under the Law on the Improvement of Cadastral Data and the Procedure for Systematic and Sporadic Registration of Rights to Plots of Land, under which NAPR is surveying previously unregistered parcels across 59 municipalities. December 2025 amendments continue sporadic registration from January 2026 and require NAPR, by 1 January 2027, to resolve ownership recognition over unlawfully occupied plots and identify unmapped or disputed parcels – a concrete near-term date relevant to due diligence timelines for parcels not yet fully within the cadastral system (see 2.4 Real Estate Due Diligence).

Beyond these areas, reform has proceeded through periodic, mechanism-specific amendment rather than a single omnibus bill, and the authors are not aware of anything else currently in the pipeline that is similarly material.

Ownership is the broadest real right, entitling the holder to possess, use and dispose of the property, and may be held individually or in co-ownership (shared, in defined percentages, or joint). It is subject to one constitutional restriction: Article 19(4) reserves agricultural land ownership to the state, municipalities, Georgian citizens and associations of Georgian citizens, subject to narrow exceptions under organic law (see 2.11 Legal Restrictions on Foreign Investors).

The other real rights recognised by the Civil Code are superficies, entitling the holder to erect and own a structure on another’s land for an agreed period; usufruct, entitling the holder to use and enjoy another’s property and take its fruits, typically on a personal, non-transferable basis; servitude, benefiting one parcel over another (eg, a right of way); and pledge and mortgage, the security rights addressed in 3. Real Estate Finance.

Transfer of title is governed principally by the Civil Code, Book Two, together with the Law on the Public Registry, which governs the registration act that perfects the transfer. The Organic Law on Ownership of Agricultural Land imposes a separate regime for agricultural land, restricting acquisition by foreign individuals and foreign-controlled legal entities (see 2.11 Legal Restrictions on Foreign Investors).

There is no statutory regime segmenting transfer rules by asset class. The same Civil Code and Public Registry rules apply to residential, office, retail, industrial and hotel property alike. Use- and construction-related overlays come from the Code on Spatial Planning, Architectural and Construction Activities rather than from the transfer regime itself.

Ownership of immovable property is created and transferred only on registration with NAPR. Registration, not execution of the sale agreement, is the constitutive act – a point that repeatedly surprises buyers from jurisdictions where title passes on completion. A sale and purchase agreement is typically concluded before a notary, or signed at a Public Service Hall with the registrar’s involvement, after which the registration application is lodged with NAPR.

Processing is fast by regional standards. Standard registration completes within four working days for a fee of GEL150. Expedited options are available at GEL270 for one working day and GEL350 for same-day registration.

Registered rights carry a statutory presumption of accuracy: entries are treated as correct until inaccuracy is proven (Article 312(1)). Good-faith purchaser protection reinforces this. In favour of a person acquiring from a registered holder, the entry is treated as correct unless a claim has been filed against it or the acquirer knew it was inaccurate, and a registered sole owner is treated as the only owner unless the acquirer knew of an unregistered co-owner (Article 312(2)–(4)).

Third parties may therefore place real reliance on a registry extract. Title insurance is not a developed product in Georgia; buyers manage title risk through the statutory presumption, notarial verification and due diligence instead.

Legal due diligence centres on a current NAPR extract, verifying the chain of title, ownership and registered encumbrances – mortgages, pledges, servitudes, court-ordered restrictions and attachments, and registered leases. Where the seller is a legal entity, corporate due diligence (registry extract, charter, transaction approvals, signing authority) is standard, alongside searches for pending litigation or insolvency.

For land, attention focuses on designated land category (confirming it is not agricultural where a foreign buyer is involved – see 2.11 Legal Restrictions on Foreign Owners), boundaries and cadastral data (increasingly reliable outside the self-governing cities as systematic registration extends georeferenced mapping – see 1.3 Proposals for Reform), and any pending expropriation or public-interest designation.

Technical due diligence – structural condition, compliance with the permit, unauthorised construction – and environmental due diligence, where relevant, are carried out by engineering consultants alongside legal counsel, particularly on commercial acquisitions and development sites.

Sale agreements standardly cover corporate capacity, clear title registered at the Public Registry, absence of litigation or expropriation, compliance with construction permits, and settlement of property taxes and utility arrears. Share deals also carry standard target corporate and tax warranties.

The Civil Code provides statutory protections requiring sellers to transfer title free of encumbrances (Article 487) and property free of latent physical or environmental defects (Articles 488–490), though commercial transactions routinely modify these defaults through “as-is” clauses, disclosure schedules and negotiated indemnities.

Post-closing remedies for misrepresentation centre on contractual damages, price reduction or contract rescission for fundamental breaches. To secure potential claims against seller SPVs, buyers typically negotiate bank escrow holdbacks of 5% to 10% of the purchase price for six to 12 months, purchase price retention or parent guarantees.

While the statutory limitation period for real estate contract claims is six years (Civil Code Article 129(1)), parties routinely negotiate shorter contractual survival periods. General representations typically survive for 12 to 24 months, whereas title, corporate capacity, tax and environmental warranties extend to three to six years.

Seller liability for general warranty breaches is customarily capped at 10% to 20% of the purchase price, rising to 100% for fundamental title and capacity warranties. Contracts also include a de minimis threshold of 0.1% to 0.5% and an aggregate basket or deductible of 0.5% to 1% of the purchase price.

Representation and warranty insurance is practically non-existent in the domestic Georgian market. It is used only on exceptional cross-border transactions exceeding USD20 million involving foreign institutional investors and offshore underwriters.

Investors need to be comfortable with the Civil Code property regime and NAPR registration mechanics, which together determine title certainty; the Organic Law on Ownership of Agricultural Land, where the target includes farmland or land of uncertain designated purpose; and planning and construction legislation under the Spatial Planning Code, which determines permitted use, permit status and exposure to unauthorised construction.

On the financing and tax side, the Tax Code and, for leveraged acquisitions, the Civil Code pledge and mortgage regime are central, together with National Bank of Georgia prudential rules where the lender is a regulated Georgian bank.

Corporate structuring is equally important on larger or portfolio transactions – see 5. Investment Vehicles.

Georgian environmental liability legislation, which follows the polluter-pays principle in part, generally attaches responsibility to the party that caused the damage. As a starting position, acquiring contaminated real estate does not of itself impose liability on an innocent buyer for pre-existing contamination.

The position shifts once the buyer takes over operation of the site or the activity. Obligations to prevent, mitigate or remediate an imminent threat of environmental damage can attach to the current operator or owner regardless of who caused the contamination.

This area is less developed in Georgian practice than in EU jurisdictions, and buyers of industrial or formerly industrial sites should treat environmental due diligence and contractual allocation as the primary protection rather than relying on the causation principle alone.

Permitted use is determined by the municipal land-use documentation adopted under the Code on Spatial Planning, Architectural and Construction Activities, read together with the construction permit, or building notice for simpler works, issued for the parcel. Tbilisi City Hall and other municipalities maintain planning documentation, and Tbilisi operates online mapping tools; buyers or their counsel can request official information on zoning designation and permitted use and density parameters for a given parcel.

Agreements with public authorities at development stage are possible in connection with permitting, for example in agreeing conditions attached to a construction permit. Georgia does not, however, have a widely used freestanding planning agreement instrument comparable to the urbanisation agreements seen in some EU jurisdictions. Developers work within the permit-conditions framework set by the Code and by municipal regulation.       

Governmental taking of land is possible. Article 19 of the Constitution permits deprivation of property for a pressing public need, on the basis of a court decision – or, in urgent cases defined by organic law, without a prior court decision – and against prior, full and fair compensation. The principal implementing legislation is the Law on the Procedure for the Expropriation of Property for Pressing Social Needs, supplemented by legislation covering urgent circumstances.

The authority must first seek to acquire the property by agreement, engaging an independent expert to value it and the proposed compensation. Failing agreement, the matter proceeds to court, which determines both the public-need justification and the compensation.

Compensation reflects market value and is exempt from taxes and fees, and the expropriator bears the valuation, litigation and transfer costs.

Georgia does not levy a separate ad valorem real estate transfer tax comparable to many European jurisdictions’ RETT/stamp duty regimes. On an asset deal, the principal transaction-related cost is the NAPR registration fee (a modest fixed/tiered administrative fee depending on service speed, rather than a percentage-of-value transfer tax), together with any applicable notarial fees. VAT (18%) applies where the seller is a VAT-registered person selling in the course of economic activity (see 8.1 VAT and Sales Tax); a purely private individual selling their own property outside of business activity is generally outside the scope of VAT.

Georgian corporate income tax follows the Estonian-model distributed-profit system: retained/reinvested corporate profit is not taxed; CIT (15%) is triggered on distribution (dividends) or on deemed-distribution events. A share deal transferring shares in a property-holding company therefore does not itself trigger the asset-level registration fee, but capital gains realised by the seller on the share transfer may be subject to Georgian tax depending on the seller’s residence and applicable double tax treaty position.

Where more than 50% of a target’s asset value derives directly or indirectly from Georgian immovable property, income from disposing of shares in that entity is itself treated as Georgian-source income (Tax Code, Article 104(1)(n)) – a share sale cannot escape the Georgian tax net simply by taking that legal form rather than an asset transfer. For a non-resident individual seller, this income is taxed on a net basis, consistent with the mechanics described at 8.4 Income Tax Withholding for Foreign Investors.

Whether VAT applies to an asset deal ultimately turns on the seller’s VAT status, as above – see 8.1 VAT and Sales Tax for the registration threshold mechanics.

Georgia is unusually open to foreign real estate investment by regional standards: foreign individuals and foreign-owned entities may freely acquire residential and commercial real estate – apartments, houses, retail and office space, non-agricultural land – with no residency or reciprocity requirement.

The principal exception is agricultural land, which Article 19(4) of the Constitution treats as a resource of special importance. Foreign individuals and foreign-controlled entities are generally prohibited from acquiring it under the Organic Law on Ownership of Agricultural Land, subject to three exceptions: inheritance, with no automatic disposal obligation (Article 4(2)(a)); government-approved investment plans, where a Georgian entity with a foreign “dominant partner” (majority equity holder with practical control over agricultural-land decisions) may acquire land with explicit approval (Article 4(2)(b)); and licensed financial institutions acquiring land in the ordinary course of business, including enforcement of mortgaged collateral (Article 4(3)). Where land is acquired under an investment plan and the entity later fails to meet its obligations, it must dispose of the land within one year of default or title reverts automatically to the state (Article 5(1)-(3)).

Foreigners may lease agricultural land freely, and common structuring routes include long-term leases, a Georgian entity with a qualifying domestic dominant partner, or government-approved acquisition under an investment plan. There is no foreign investment screening regime equivalent to FIRRMA or CFIUS.

Commercial acquisitions are financed principally through senior secured bank debt from Georgian commercial banks, a concentrated sector in which two banking groups account for the large majority of system assets. Larger or cross-border sponsors also draw on international and regional development finance institutions, including the IFC, EBRD and ADB, alongside local banks.

Residential development is frequently financed through a combination of developer equity and pre-sale or instalment payments from buyers. This remains the dominant model for new-build residential in Tbilisi and Batumi, with bank construction finance supplementing rather than replacing pre-sales on many projects.

For portfolio or corporate-level acquisitions – acquiring a company holding multiple assets, or a financial institution with real estate exposure – structures combine acquisition debt with instrument-level structuring and closer engagement with the National Bank of Georgia where the target is itself regulated.

The Mortgage

The mortgage is the core real estate security right. It entitles a secured creditor to satisfy its claim ahead of other creditors through realisation of the mortgaged property or its transfer into the creditor’s ownership (Article 286(1)). A mortgage may secure a future or conditional claim provided the claim is capable of definition when the mortgage is created (Article 286(2)), which makes it workable for revolving facilities and phased development finance.

The Wider Security Package

Typical commercial packages add a pledge over the shares in the borrowing SPV, a pledge over its bank accounts and, for development or income-producing assets, an assignment or pledge of receivables covering rental income, pre-sale receivables and insurance proceeds. Lenders are commonly named as loss payees under the property insurance. Where the mortgaged asset includes agricultural land, the mortgage must also comply with the Organic Law on Ownership of Agricultural Land (Article 286(3-1)).

A separate restriction on lending to natural persons (Article 286(4)-(6)) does not affect regulated commercial lending of this kind – see 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders.

There is no general prohibition on granting a mortgage over Georgian real estate in favour of a foreign lender, and no restriction on a Georgian borrower repaying principal or interest to a foreign lender under a loan agreement or security document. Standard currency-control reporting applies, as does withholding tax on interest paid to a non-resident lender, subject to reduction under an applicable double-tax treaty.

Foreign non-bank lenders should note the restriction discussed at 3.2 Typical Security Created by Commercial Investors. If the borrower is a natural person and the foreign lender is not itself a bank or microfinance-type institution supervised by the National Bank of Georgia, the borrower’s own real estate generally cannot secure the loan by mortgage. This is a genuine trap for private credit funds lending to individual borrowers.

Georgia does not impose an ad valorem documentary or stamp tax on the granting or enforcement of a mortgage. The principal cost is the statutory NAPR registration fee to perfect or amend the mortgage, together with notarial fees where notarisation applies.

Mortgage registration is charged on the same fixed, speed-based basis as property registration – GEL150 for standard processing, GEL270 for one working day and GEL350 for same-day service.

Notarial fees are regulated under state tariff schedules and are modest, typically a small percentage of contract value or a flat fee.

Corporate authority: the Law on Entrepreneurs and general Civil Code principles require that a company’s grant of security be properly authorised by its corporate bodies in accordance with its charter, including any shareholder or supervisory board approval thresholds for material transactions and any related-party transaction rules.

Georgian corporate law contains no UK or EU-style statutory financial assistance prohibition preventing a target from securing debt incurred to acquire its own shares. The safeguards operate instead through general corporate authority, conflict-of-interest rules and, for regulated entities such as banks, National Bank governance and connected-lending requirements.

Form and registration: A mortgage takes legal effect only on registration in the Public Registry (Article 289(1)). Registration proceeds on one party’s submission of the underlying transaction, which must identify the owner, the mortgagee and the probable third-party debtor, and may specify the secured amount, interest and performance term.

Where the mortgage secures a claim under a loan agreement, the mortgage agreement must be notarised and the notary must explain the consequences of breach to the parties (Article 289(1-1)). That requirement does not apply where the creditor is a commercial bank, microbank, microfinance organisation, credit union or an investment fund authorised under the Law on Investment Funds (Article 289(1-3)) – a useful efficiency for regulated lenders.

The Public Registry may also issue a mortgage certificate at the creditor’s request, in which case the agreement must be notarised and further notarisable acts certified by the same notary. Only one certificate is issued per joint mortgage (Article 289(2)–(4)).

Security interests are accessory to the underlying obligation, and priority is generally determined by the date of registration with NAPR for mortgages, or with the relevant pledge registry for pledges over movables, receivables and shares.

On default, a mortgagee may enforce through the courts or, where the mortgage agreement so provides, through a contractually agreed out-of-court sale. The out-of-court route is permitted and commonly used by banks to shorten enforcement timelines relative to full judicial foreclosure. Contractual out-of-court sale (NAPR/notary execution) typically takes three to six months from the initial notice of default to completion of the public auction: the mortgagee registers a notice of enforcement with NAPR and serves formal notice to the mortgagor, and if the default is not cured within the statutory/contractual cure period (typically two to four weeks), an authorised specialist or enforcement officer conducts the auction, provided the debtor does not obtain a court injunction.

Judicial foreclosure (court enforcement and the Enforcement Bureau) typically takes 12 to 24+ months to reach full realisation, requiring a formal court claim, a final executable judgment (with possible appeal to the Court of Appeals and Supreme Court), and submission of the writ of execution to the National Bureau of Enforcement for public auction.

There are no continuing pandemic-era restrictions on foreclosure or realisation of real estate collateral. Banks have continued to exercise foreclosure rights where a negotiated workout is not achievable, though they generally prefer restructuring or forbearance for viable borrowers before enforcing.

There is no developed or liquid secondary market for portfolios of non-performing real-estate-secured loans comparable to more mature European markets.

Subordination by agreement is possible. Existing secured creditors may agree contractually, typically through an intercreditor agreement, to subordinate their priority to newly created debt notwithstanding the general registration-date rule.

The claim secured by an existing mortgage may itself be replaced by another claim, provided the owner and the mortgagee agree and the agreement is registered in the Public Registry (Article 286(3)). This allows parties to refinance or restructure the secured obligation without releasing and re-granting the mortgage, preserving the original registration priority.

A related mechanism, the owner’s mortgage, lets an owner preserve a registered mortgage’s priority rank for a later refinancing rather than losing it to intervening encumbrances, where the secured claim never arose, is extinguished, or passes to the owner (Article 288).

Under the Law on Insolvency Proceedings, new financing extended during a rehabilitation may be given priority treatment to encourage rescue finance, subject to the plan and creditor approval.

As with buyers generally (see 2.7 Soil Pollution or Environmental Contamination), Georgian environmental liability legislation is oriented towards the party that caused the damage. A lender merely holding security is not treated as an operator or polluter.

The analysis changes if the lender takes possession of, or steps into direct control of, mortgaged real estate following enforcement, at which point operator-type obligations could attach prospectively.

This is an under-tested area of Georgian law. Lenders mitigate contractually – through environmental representations and by structuring step-in rights to avoid assuming operator status – rather than relying on settled statutory certainty.       

Under the Law on Insolvency Proceedings, in force since April 2021, the opening of rehabilitation or bankruptcy triggers an automatic moratorium suspending compulsory enforcement against the debtor’s property, including enforcement of security, for the duration of the moratorium and subject to statutory carve-outs and court-sanctioned exceptions.

Security interests are not automatically voided by insolvency. A secured creditor retains its secured status and priority, but its ability to enforce is constrained during the moratorium and is thereafter exercised within the collective process, typically through negotiated release from the estate or a realisation co-ordinated with the insolvency manager.

Security granted shortly before insolvency may be vulnerable to avoidance under the provisions on preferential or fraudulent transactions, particularly where it was granted for a pre-existing rather than a contemporaneous debt within the look-back period.

As noted at 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security, Georgia does not levy a documentary or mortgage recording tax of the ad valorem type seen in some jurisdictions. The cost of granting a mortgage is limited to NAPR registration fees and notarial fees.

The authors are not aware of pending legislative proposals to introduce a recording or similar tax targeting mortgage or mezzanine loans.

Land use, development, design and construction are governed by the Code on Spatial Planning, Architectural and Construction Activities, in force since 3 June 2019, which consolidated and replaced a fragmented earlier framework.

The Code establishes the hierarchy of spatial and urban development plans at national, regional and municipal level; sets substantive requirements for buildings and structures, including structural safety, seismic resistance, fire safety and energy efficiency; governs construction permit and building notice procedures; and establishes construction supervision and enforcement rules, including mandatory certification of architects and responsible engineers.

Municipalities are the primary permitting and planning authorities – in Tbilisi, City Hall through its Architecture Service – operating within the framework set by the Code and by municipal land-use plans and building regulations adopted under it. The Ministry of Economy and Sustainable Development and the Spatial and Urban Development Agency hold policy and co-ordination roles nationally.

Development rights are obtained through the construction permit process for larger or more complex works, or through a simplified building notice procedure for lower-risk construction, both administered by the competent municipal authority under the Code.

The permit process requires an architectural and construction project prepared by a certified architect, verification of compliance with zoning and technical requirements, and payment of fees. Depending on the site, approval from consulted bodies may be required – cultural heritage authorities for protected zones, and environmental authorities where a separate permit or impact assessment applies.

Administrative appeal lies against permitting decisions, through hierarchical appeal within the issuing authority or the relevant ministry, with judicial review available before the administrative courts.

Enforcement runs through construction supervision inspections and administrative sanctions. For unauthorised construction, the responses available are orders for legalisation where a procedure is open, suspension of works, or demolition.

The Law on Entrepreneurs (2021) recognises individual entrepreneurs, general partnerships, limited partnerships, limited liability companies, joint stock companies and co-operatives.

In practice, the LLC is by far the most common vehicle for holding Georgian real estate, given its administrative simplicity, flexible capital structure and the absence of a minimum capital requirement. The JSC is generally reserved for larger investments, businesses anticipating outside or public investment, and entities for which the JSC form is mandatory, such as banks and insurers.

For larger collective real estate investment, sponsors may use a fund structure regulated by the National Bank of Georgia, managed by a licensed asset management company – see 5.3 REITs.

Limited Liability Company

An LLC may be established by a single founder, who may also act as sole director. There is no statutory minimum capital requirement, and contributions may be monetary or in kind, including services or work, which is not permitted for a JSC. Shares are transferable subject to the charter.

Joint Stock Company

A JSC requires a minimum subscribed capital of GEL100,000, at least 25% of which must be paid in incorporation (see 5.4 Minimum Capital Requirement). Contributions must be monetary or asset-based, and non-monetary contributions require independent auditor valuation, published on the Public Registry portal.

Tax Treatment

Both forms are subject to Georgia’s Estonian-model corporate income tax: retained and reinvested profit is untaxed, and CIT at 15% is triggered only on distribution or a deemed-distribution event. Georgia does not operate a general participation exemption, but the untaxed-reinvested-earnings model materially benefits buy-and-hold real estate structures relative to jurisdictions taxing income as it arises.

Georgia has no dedicated statutory REIT regime comparable to the European or Anglo-American models. Collective real estate investment is structured instead under the Law on Investment Funds, supervised by the National Bank of Georgia.

Under that framework, real estate vehicles operate as specialised alternative investment funds, either as authorised investment funds for public offerings or as registered investment funds for private placements, the latter capped at 20 retail investors or restricted to qualified investors. The funds must be managed by an NBG-licensed or recognised asset management company, and public vehicles require an independent specialised depositary.

The vehicles can be structured as open- or closed-ended funds, as contractual schemes or as corporate investment companies, and are open to foreign capital. In practice, however, the market for real estate collective investment schemes remains in its infancy. Direct ownership and single-asset SPVs organised as LLCs continue to dominate institutional and cross-border property transactions.

There is no statutory minimum capital requirement for an LLC; it may be established with nominal or no paid-in capital, though the charter may impose voluntary capital obligations. A JSC requires a minimum subscribed charter capital of GEL100,000, at least 25% paid up in cash at incorporation. A branch of a foreign entity requires no separate equity allocation, as the parent remains liable for its obligations.

Regulated fund managers are different: asset management companies and investment funds are supervised by the National Bank of Georgia under the Law on Investment Funds, and each – whether a licensed AMC or an authorised investment company, including internally managed structures – must maintain minimum regulatory capital of GEL300,000, denominated in lari rather than foreign currency.

Governance requirements vary by entity type under the Law on Entrepreneurs. An LLC is governed flexibly by one or more directors or a board, with a supervisory board optional unless the charter requires one. A JSC may adopt a single-tier board (combining management and oversight) or a two-tier structure (separate management and supervisory boards); a supervisory board is mandatory only for regulated or large entities – public reporting companies, listed entities, or NBG-licensed financial institutions – and reporting JSCs meeting asset or revenue thresholds face mandatory annual audit. NBG-regulated investment funds and their asset managers face additional oversight, including mandatory supervisory boards, independent compliance/risk functions and certified annual audits.

Disclosure requirements: all Georgian entities must disclose beneficial ownership to NAPR’s entrepreneurial registry; since 1 April 2025, existing entities have also had to confirm their actual beneficial owner, with penalties for non-compliance. Oversight sits with Georgia’s Financial Monitoring Service rather than NAPR, and the information is not centrally public.

Georgia has no Corporate Transparency Act equivalent – a Georgian entity holding only Georgian property, with no US state filing, does not trigger CTA reporting. US persons should instead consider IRS Form 5471 (or 8865 for partnerships) for their ownership interest and FATCA reporting of specified foreign financial assets; FBAR applies only where the entity holds foreign financial accounts in which the US owner has a reportable interest.

Ongoing costs for an LLC are modest, covering bookkeeping, annual financial reporting and registration maintenance, with audit obligations arising only above the size thresholds set by the Law on Accounting, Reporting and Auditing. Costs are materially lower than in most EU jurisdictions.

A JSC carries higher ongoing costs, reflecting mandatory audit for reporting entities, the operation of a supervisory board and, for entities with publicly traded shares, National Bank and Georgian Stock Exchange compliance and disclosure obligations.

Georgian law recognises several arrangements permitting use of real estate without acquiring ownership.

The lease agreement under the Civil Code is the principal one. Usufruct entitles the holder to use and enjoy another’s property and take its fruits, typically on a personal basis. Superficies entitles the holder to construct and own a building on another’s land for an agreed term.

Servitude covers defined, limited rights of use such as access, and loan-for-use arrangements allow property to be made available without consideration.

The Civil Code does not create statutorily distinct categories of commercial lease by asset type. The same general lease provisions apply to office, retail, industrial and hotel property alike, with parties tailoring terms contractually to the intended use.

In practice, the market distinguishes informally between standard bilateral leases and the more complex arrangements common in shopping centres and mixed-use developments, which combine lease terms with service and operational undertakings from the landlord. These resemble in commercial substance, though not in legal category, the shop-use agreements seen in other jurisdictions.

Commercial lease terms, including rent, duration, renewal and termination, are freely negotiable, subject to the Civil Code default rules that apply where the lease is silent.

Georgia operates no rent control regime for commercial or residential property, and there is no statutory cap on rent increases.

Length

For institutional-grade assets such as prime office, anchor retail and hospitality property, leases of five to ten years with renewal options are commonly seen in larger institutional transactions. Smaller retail units and secondary office space typically take one- to three-year commitments.

Maintenance and Repair

Statutory defaults are minimal, leaving allocation to negotiation. Market practice assigns structural integrity, roof, facade and major plant to the landlord, and interior wear and tear, minor repairs and tenant fit-out maintenance to the tenant.

Rent Payment

Rent is standardly payable monthly in advance. Leases for premium property frequently quote rent in US dollars or euros to manage currency risk, but domestic payments and invoice settlement must be executed in lari at the National Bank rate on the payment date.

Rent variation is a matter of contract. Longer-term commercial leases commonly include indexation, whether to an agreed inflation measure or a fixed annual escalation, or provide for periodic market rent review.

Absent such a clause, the rent remains fixed for the agreed term.

New rent is determined by whatever mechanism the parties have agreed – most commonly a fixed percentage or index-linked escalation, and less commonly third-party valuation or market review at renewal.

There is no statutory default index that applies automatically to Georgian commercial leases in the absence of contractual agreement, unlike jurisdictions that publish an official coefficient. If a dispute arose over silence on the point, the Civil Code’s general rules of contract interpretation would apply.

Where the landlord is a VAT-registered person leasing in the course of economic activity, rent is subject to VAT at the standard 18% rate. It is generally payable by the tenant in addition to the agreed rent and accounted for by the landlord.

Leasing real estate is a service connected with immovable property, so the place of supply is the location of the property (Article 162-1(4)). Georgian VAT rules therefore apply to leases of Georgian real estate regardless of where the landlord is established – which matters for foreign landlords and for cross-border property and asset management arrangements.

Under Article 581(2) of the Civil Code, commercial lease agreements are governed subsidiarily by the general provisions of tenancy law. In general tenancy law, Article 552 establishes protective security deposit rules – capping cash deposits at three months’ rent, requiring prepaid deposits to yield statutory interest, and returning accrued interest to the tenant upon termination. Accordingly, in judicial and commercial practice, the statutory provisions of Article 552 – applied through the subsidiary bridge of Article 581(2) – serve as the baseline governing framework for security deposits in commercial leases.

Allocation of common-area maintenance costs – parking, landscaping and shared building services – is a matter of contract.

In multi-tenant commercial buildings, landlords commonly recover these costs from tenants through a service charge mechanism set out in the lease, reconciled periodically against actual expenditure.

Tenants typically bear utility and telecommunications costs directly, either through individual metering and direct contracts with providers, or through inclusion in a service charge.

Where individual metering is impractical, which is common in older multi-tenant buildings, the service charge is apportioned by area or by estimated consumption.

As a matter of law, property tax liability rests with the owner.

Landlords frequently pass the cost through to tenants contractually, particularly in triple-net-style leases, so the ultimate economic burden is negotiated notwithstanding the statutory incidence on the owner.

Buildings insurance is typically arranged and paid for by the landlord, covering standard perils including fire, natural catastrophe and water damage. In net-lease structures, the cost may be passed through to tenants. Tenants are generally responsible for insuring their own fit-out, contents and business operations, including public and civil liability cover.

Standard Business Interruption policies in the Georgian market require physical loss or material damage to the insured premises as a contractual trigger for indemnity, so office closures or lockdowns without physical damage generally fall outside cover. The authors are not aware of any published Georgian court decision testing pandemic-related business interruption claims – the absence of reported litigation is consistent with, but does not itself confirm, insurers applying the damage trigger without challenge, and this would benefit from direct confirmation of claims-handling experience. 

Use restrictions are standard and enforceable as a matter of contract. Georgian commercial leases routinely include a permitted use clause, a prohibition on subletting or assignment without consent, restrictions on structural alteration, a prohibition on storing hazardous materials, and an obligation to comply with building rules.

Further restrictions may derive from the property’s construction permit, which specifies the permitted designated use of the building or premises under the Spatial Planning Code, and from condominium or co-ownership rules in multi-unit buildings.

Tenants are generally permitted to carry out fit-out and improvement works, subject to landlord consent for anything beyond the agreed initial fit-out and particularly for structural changes.

Leases typically require works to be professionally executed and compliant with construction and permitting requirements, and provide either for reinstatement at lease end or for the works to be left in place for the landlord’s benefit without compensation, as agreed.

There is no separate statutory lease sub-regime by asset class (see 6.2 Types of Commercial Leases). Regulatory distinctions arise indirectly, through the permitted-use designation attaching to a building or unit under its construction permit, which differs by asset type. Hotel and tourism-use buildings, for example, are subject to specific licensing requirements under tourism legislation, separate from the lease regime.

Georgia did not maintain COVID-era rent moratoria or asset-class-specific lease legislation into the review period.

A tenant’s insolvency does not automatically terminate the lease. Under the Law on Insolvency Proceedings, current regular obligations arising from a lease continue in the ordinary course during rehabilitation unless the insolvency manager elects otherwise within their statutory powers, and the insolvency estate framework governs how continuing rent claims and arrears rank against other creditor claims.

Landlords should expect the automatic moratorium (see 3.9 Effects of a Borrower Becoming Insolvent) to constrain immediate self-help remedies, including straightforward re-entry or eviction for arrears, during the moratorium period. The position thereafter is governed by the specific rehabilitation or bankruptcy process.

As a general rule, the tenant must vacate and hand over the premises on expiry or termination, absent agreement to the contrary.

Where a tenant holds over without a fresh agreement, general Civil Code contract principles treat continued occupation coupled with the landlord’s acceptance of rent as capable of giving rise to an implied renewal on similar terms, on a month-to-month or otherwise indefinite basis, unless the lease or the landlord’s conduct makes clear that no renewal is intended.

A landlord wishing to avoid this should give clear and timely written notice that the lease is ending and that occupation must cease.

Assignment of the tenant’s contractual position, and subletting of the whole or part of the premises, is generally subject to the landlord’s prior written consent under standard Georgian lease drafting. The Civil Code does not grant tenants a statutory right to assign or sublet free of landlord consent.

Where consent is given, the original tenant is commonly required to remain liable jointly with the assignee or subtenant for the lease obligations unless the landlord expressly releases it.

Consistent with general Civil Code principles, either party may terminate for material breach by the other that undermines the basis of the agreement – sustained non-payment of rent by the tenant, for example, or failure by the landlord to deliver or maintain the premises in usable condition.

Parties are free to supplement these principles, and commonly do, with detailed contractual termination triggers, specified cure periods, break options and insolvency-related termination rights, the last of these subject to the moratorium discussed at 3.9 Effects of a Borrower Becoming Insolvent and 6.16 Effect of the Tenant’s Insolvency.

Commercial leases need not be notarised to be validly formed, although notarisation is commonly used to strengthen enforceability and evidentiary weight, particularly on longer-term leases and where a party is non-resident.

Registration is not uniformly optional, and the correct position turns on the parties and the term. Article 11(1)(f)-(g) of the Law of Georgia on the Public Registry lists rent and lease rights as rights subject to registration; Article 11(5) makes registration a precondition for the right’s legal emergence – not merely for opposability – where the lease involves a private-law legal entity as landlord and/or tenant for a term exceeding one year, including aggregate connected terms. Since most institutional-grade commercial leases in Georgia involve a corporate party and run beyond a year, this mandatory trigger captures the majority of leases in practice: an unregistered lease has not legally arisen at all. Outside that trigger – a lease between natural persons only, or for a term of one year or less – registration is not a condition of validity, and instead makes the lease opposable to third parties (eg, a subsequent purchaser, mortgagee, or other creditor); it is commonly elected anyway for longer-term or higher-value arrangements.

Where registration is elected or required, the applicable fee is NAPR’s general fee for registering rights to immovable property (there is no separate lease-specific tariff): GEL150 for standard four-working-day processing, GEL270 for one working day or GEL350 same-day. The Civil Code sets no default rule on who bears this cost for a lease – unlike its default rule for sales, under which the seller bears contract, registration and filing costs absent agreement (Article 479) – so allocation is negotiated, and market practice commonly assigns it to whichever party is pressing for registration; most often the tenant on longer institutional leases.

Eviction is available on default. A landlord may seek judicial termination of the lease and an eviction order for tenant default, most commonly non-payment of rent, or may rely on a contractually agreed accelerated remedy where the lease and applicable enforcement legislation permit it.

The duration of judicial eviction proceedings depends on court caseload and on whether the tenant contests the claim. There are no continuing pandemic-era eviction moratoria in effect.

A lease is not directly terminable by a third party, but it may become impossible to perform or may lapse in practice as a result of third-party action. The clearest cases are expropriation of the leased premises for a pressing public need (see 2.9 Condemnation, Expropriation or Compulsory Purchase) and a regulatory or administrative order requiring closure for non-compliance with safety, construction or licensing requirements.

Where expropriation extinguishes the landlord’s title, the tenant’s leasehold interest is correspondingly affected. Compensation on expropriation is payable to the owner. The tenant’s recourse, if any, lies against the landlord under the lease and general contract and damages principles, rather than as a direct statutory claim against the expropriating authority.

Georgian law does not impose a statutory cap on the damages a landlord may recover for tenant breach. Landlords may pursue outstanding rent, damages for breach – including, depending on the drafting, loss of future rent for the remaining term, subject to ordinary mitigation principles – and recovery of the property, in addition to eviction.

Security deposits are standard market practice in commercial leases (see 6.8 Costs Payable by a Tenant at the Start of a Lease). They are most commonly held as cash, although bank guarantees are also used, particularly by larger corporate tenants and on higher-value leases.

Georgian construction contracts commonly use fixed-price lump-sum structures for well-defined scopes, cost-plus or open-book pricing where scope is uncertain at signing, which is common on early-stage or fast-track projects, and unit-price or bill-of-quantities structures where work is priced as measured.

International sponsors and lenders frequently require FIDIC-based or FIDIC-influenced forms adapted to Georgian law and to the Civil Code’s construction contract provisions, particularly on larger or internationally financed developments.

Responsibility is allocated contractually, most commonly either through a traditional design-bid-build split, with separate design consultants and a main contractor, or through a design-and-build or EPC structure giving a single point of responsibility. The latter is more common on larger commercial and hospitality projects.

Under the Spatial Planning Code, the certified architect responsible for the architectural project and the responsible construction engineer bear defined statutory responsibility for the compliance of the design and works with technical and safety requirements, independent of the contractual risk allocation between employer and contractor.

Construction risk is managed through the standard contractual devices: contractor warranties as to workmanship and materials, indemnities for third-party claims, contractor’s all-risk and professional indemnity insurance, liability caps, and defects-liability and retention mechanisms.

One limit applies to the caps and exclusions. Civil Code restrictions on excluding liability for wilful misconduct or gross negligence cannot be contracted around. Payment is commonly linked to independently verified progress certification and milestone achievement.

The Civil Code’s contract-of-work (ნარდობა) provisions supply the statutory backstop against which contractually negotiated defects-liability periods sit: a claim for defective performance may generally be brought within one year, extended to five years specifically for claims relating to a building (ნაგებობა), running from the date the completed work is accepted (Civil Code, Article 655); where work is accepted in instalments, this limitation period runs instead from the date the work is accepted in full (Article 656). Parties frequently negotiate contractual warranty/defects-liability periods around these statutory limitation periods, and a contractor who deliberately conceals a defect cannot rely on any contractual term excluding or limiting the employer’s rights in respect of that defect (Article 654).

Georgian construction contracts commonly include delay liquidated damages (a pre-agreed daily/weekly rate applied to critical delays), milestone-linked payment and, in more sophisticated contracts, extension-of-time mechanisms for excusable delay events, mirroring standard FIDIC-style risk allocation. Parties are free to agree such compensation mechanisms; the Civil Code’s general rules on penalty clauses (permitting court moderation of manifestly excessive penalties) apply as a backstop.

Performance bonds and bank guarantees, whether first-demand or conditional, securing a percentage of the contract price are the most common additional security in the Georgian market. They are typically maintained through practical or substantial completion and stepped down for the defects-liability period.

Parent company guarantees are used where the contractor is a subsidiary of a larger group, particularly on internationally sponsored projects. Retention, a percentage withheld from progress payments, is also common and is used either alongside or instead of a formal bond.

Georgian law does not give a contractor a self-executing, automatically-attaching statutory lien over real estate of the kind found under a US-style mechanic’s lien, which attaches to the property by operation of law from the moment labour or materials are supplied. Instead, the Civil Code’s contract-of-work chapter gives contractors two distinct, narrower statutory security rights, each requiring an affirmative step rather than arising automatically.

Over movable property, a contractor may exercise a pledge right over movable items they manufactured or repaired to secure their claims, provided the item remains in the contractor’s possession for that purpose (Civil Code, Article 634) – a possessory security right, similar in substance to a combined right of retention and pledge, but reaching only movables actually in the contractor’s hands.

More significantly, where the contract concerns a building or part of one, the contractor may demand a mortgage over the construction land plot to secure its claims (Civil Code, Article 635) – the closest Georgian equivalent to a mechanics’ lien. The key difference is mechanism, not existence: the right is not self-executing. The contractor must actively assert the demand, and the mortgage only takes effect once registered (see 3.5 Regal Requirements Before an Entity Can Give Valid Security, Article 289), which ordinarily requires the owner’s co-operation or a court order compelling it.

An owner seeking to remove such an encumbrance would do so through the general mortgage-release mechanisms discussed at 3. Real Estate Finance – satisfaction of the secured claim, agreement between the parties, or, where the underlying claim did not arise or has been extinguished, the “owner’s mortgage” concept at Civil Code Article 288 – and through ordinary dispute resolution over the underlying payment claim itself.

Completion formalities apply before use. Under the Code on Spatial Planning, Architectural and Construction Activities, completed construction generally requires confirmation that the works comply with the permit and its conditions before the building may lawfully be used for its intended purpose.

This is evidenced through the construction supervision and completion acceptance procedure administered by the competent municipal authority, culminating in registration of the completed building, and where relevant of individual units, with NAPR.

Using a building without completing this process exposes the owner or developer to administrative sanctions and complicates subsequent registration, sale and financing of the asset.

VAT applies at the standard rate of 18% where the seller is a VAT-registered person selling in the course of economic activity; a private individual selling their own property outside business activity is generally outside VAT’s scope. VAT is charged by the seller and economically borne by the buyer as part of the price. A person becomes a VAT payer once cumulative taxable supplies over any rolling 12-month period exceed GEL100,000 (Article 165(1)), and a real estate business cannot rely on exempt status to stay outside this threshold, since exempt real-estate supplies still count toward it where dealing in real estate is the seller’s main activity (Article 165(7)(a)).

Because Georgia imposes no separate ad valorem transfer or stamp tax on real estate (see 2.10 Taxes Applicable to a Transaction), the mitigation techniques common in high-transfer-tax jurisdictions – share-deal structuring undertaken specifically to avoid transfer tax – are largely beside the point here.

The principal Georgian planning considerations for portfolio acquisitions are instead structured around the Estonian-model corporate income tax, minimising taxable distribution events and using reinvestment to defer CIT, and VAT recovery planning where the target’s activities are VAT-relevant.

Georgia’s property tax is a national tax with locally set components rather than a municipal business rates levy, and it falls on owners rather than occupiers; there is no separate business occupation tax analogous to UK business rates. For companies, the annual rate on taxable property other than land is up to 1% of average net book value, covering fixed assets, investment property and property leased out; non-resident enterprises are taxed on the same categories, including property let under lease or rent. Land is taxed separately: non-agricultural land carries a base rate of GEL0.24 per square metre per year (multipliable by a municipal coefficient of up to 1.5), and agricultural land is taxed per hectare at differentiated rates.

Exemptions under Article 206 are available, but do not extend to land or buildings let to another person – a limitation that matters directly to landlords.

Non-resident individuals and entities earning income from Georgian real estate are generally subject to Georgian tax.

Rental income derived by an individual from letting residential space is taxed at a preferential 5% rate, conditioned on the individual not taking deductions against that income (a gross-basis election); other rental and business income is taxed under the general rules, at the 20% flat personal income tax rate or, for corporate structures, under the 15% Estonian-model CIT triggered on distribution.

The mechanics turn on who the tenant is and registration. Where the tenant is a legal entity, it withholds at source as tax agent, but may only apply the 5% rate if the landlord is registered in Georgia’s Register of Landlords (via the taxpayer’s rs.ge cabinet, under Revenue Service Situation Manual No 1518 of 7 June 2023, with a registration deadline of 1 April of the following year); absent registration, it must withhold 20%. Where the tenant is an individual, no tax-agent obligation arises: the landlord self-declares, and the 5% rate applies provided no deductions are taken – a non-resident landlord self-declaring on a net basis instead falls outside the 5% treatment and is taxed at the general rate. This registration point is a live compliance trap for non-resident landlords letting to corporate tenants.

Gains on disposal of Georgian real estate by a non-resident are generally subject to Georgian tax, with treatment depending on whether the non-resident is an individual or a corporate entity and on the availability of treaty relief.

Depreciation of buildings and structures used in business activity is deductible in computing taxable profit under the general corporate income tax rules. Its practical relevance is mainly to the calculation of a taxable distribution or deemed-profit base under the Estonian-model system, and to entities still computing tax on a traditional profit basis, such as banks and certain regulated financial institutions.

Georgia’s tax-benefit landscape for real estate investors is shaped less by asset-specific deductions than by the structural advantage of the Estonian-model CIT system itself, under which reinvested profit is untaxed.

Targeted regimes including Free Industrial Zone and International Company status can offer significant relief for qualifying real-estate-adjacent business activity, although FIZ status does not generally extend to ordinary domestic real estate investment or holding activity.