Purchase of former government cottages in Tskhneti: full legal support and mediation

Would you like to make a promising investment and purchase a potentially profitable asset on attractive terms? If you would, we invite you to consider the auction lot that came up a short while ago: former government dachas in Tskhneti, Georgia. This lot should be interesting for the investors who want to engage into hotel business in Georgia. Construction of a hotel on the land lot for sale is the central condition that the buyer has to meet. Auction participants will be able to purchase the lot at its real market price and the privatization procedure is going to be simplified for them. Privatization will be easier because all the documents are already in good order: there is an investment package, area development plan falling in line with the regional development plan, official property assessment, property registration documents, the description of servitudes, and other restrictions. Thus, buying real property in Georgia via an electronic auction is going to save you both time and money.

Offshore Pro Group will be happy to provide full legal support to the investors wishing to take part in the auction. With our assistance, you can gain advantage over other auction participants as we will handle all the pre-auction preparations, take part in the bidding on your behalf, and take care of the post-auction legal procedures. In addition to that, we will organize meetings with the Georgian Government officials should the need arise. Using our services, you will greatly improve your chances for success and will be able to purchase an asset of high liquidity on favorable terms.

The cost of our investment project legal support service including the mediation between the investor and the Government of Georgia is 3 000 EUR. 

Investments into Georgia in 2020: the advantages of the country

Georgia is attractive for foreign investors due to the business conditions that the local Government has created. These include but are not limited to the following ones:

• Economic stability – the Georgian GDP has been growing for ten consecutive year already. The forecast growth for 2020 is 4.5%.
• Tax benefits – companies registered in Free Industrial Zones as well as IT companies registered in the virtual zone are almost totally exempted from taxes.
• Free access to other countries’ markets – Georgia has made free trade agreements with China, Hong Kong, the UIS countries, Ukraine, all EU and EFTA countries, Great Britain, and Turkey.
• Visa-free access to Georgia for almost all foreign nationals. A foreigner can legally stay in Georgia for 1 year without holding a visa.
• Confidentiality of personal financial information – Georgia is not a member of the CRS (Common Reporting Standards) group and it does not exchange its residents’ financial information with other jurisdictions.

The business conditions found in Georgia in 2020 are better than those in the neighboring countries. For this reason, many foreign investors choose Georgia and establish companies there in order to conduct business in the region and in the whole world.

Tourism-related business looks especially attractive in the country. This is one of the most profitable business areas in Georgia and the largest part of the overall investments in the country is made in tourism. And not for nothing! The number of visitors to Georgia has been growing rapidly over the last few years. Every year, a new record-breaking number of tourists come to Georgia. In 2019, over 9.3 million foreigners visited the country bringing more than 3 billion US dollars to the economy. Thus, it is not surprising that all the leading hotel chains in the world have established presence in Georgia and continue building new units.

The investment project: a hotel in Tskhneti at the site of former government dachas

The Government of Georgia has resolved to use an electronic auction in order to find a new owner for

former government cottages located at the site whose total area is 89,988 square meters (968,623 sq. ft.) and that is located in Tskhneti not far from the capital city of Tbilisi. 

Investment into the construction of a hotel close to Tbilisi: a review of the area

Tskhneti settlement is located only eight kilometers (five miles) away from Tbilisi. It almost borders such city districts as Saburtalo and Vake and there is a high probability that Tskhneti will soon turn into a new district of Tbilisi.

Most tourists visiting Georgia come to Tbilisi, which makes the area around the city especially promising for building tourist facilities there. People visit Tbilisi all the year round and not only in the high season. The city offers everything that is needed for rest, business, life, and education. (There is no sea, though.) It is worth noting that not only foreigners but also many Georgians often come to Tbilisi from other parts of the country. International hotel chains do appreciate the tourist potential of the Georgian capital. Seventeen international hotel brands can be found there including Marriott, Best Western Hotels & Resorts, Wyndham, Accor Hotels, Radisson, Hilton, InterContinental, Louvre, Baltimore as well as a number of less known hotel chains. There are also many private guesthouses and hostels in Tbilisi.  

According to Galt&Tagger, the number of hotel rooms in Tbilisi grew by approximately 10,000 from 2015 to September 2019. Large international hotel chains dominate in the market owning 24% of all accommodations. These chains service mostly medium- and high-income tourists. Experts say that they keep their room occupancy rate at a high level. There were 492 tourist accommodation facilities in the third quarter of 2019in Tbilisi, which include hotels, motels, and hostels. However, this number is evidently insufficient to host all tourists as lack of accommodations has been reported in Tbilisi. Such services as Airbnb и Booking cater to lower-income tourists but they also experience problems in providing accommodations for all tourists that seek their help.

Investment into hotel business in Georgia: introducing Tskhneti

Tskhneti is a small settlement not far away from Tbilisi. It is an alpine resort located on the eastern side of the Trialeti mountain range in the Veri river valley at the altitude of 700 to 1,000 meters (2,300 to 3,300 feet) above the sea level. The climate is wonderful in the area: the summer is warm and dry with the average temperature of 20 °C (68 °F), and the winter is temperate with the temperature rarely going below -20 °C (-4 °F). The average annual precipitation is 550-600 millimeters and the relative air humidity is 67%. The area is very well ventilated: the winds and the woodland in Tskheneti make it a cool place even on the hottest summer days.

The settlement started to develop rapidly in the 1930s. A number of coniferous trees were planted in the area and in 1938, the first children’s health camp was built there. Later, a scouts’ camp was also established near Tskhneti, new buildings appeared in the settlement, and by the 1960s, the government dachas (summer cottages) were constructed to host Soviet officials.

The climate in Tskhneti has a positive impact on the residents’ health and contributes to revitalization.  It is especially recommended to people with respiratory diseases as well as anemia. 

There are no production plants in Tskhneti but only private houses, several health camps, guesthouses and the dachas. The settlement boasts advanced infrastructure. Several shops, supermarkets, and a Liberty Bank office are located along the central street named after Shota Rustaveli. Cafes and restaurants are mainly to be found in the outskirts of the settlement.

A review of the investment project: the land lot for hotel construction in Tskhneti

The government cottages are located in the southeastern part of the settlement. They border on Dmitri Amilakhvari street in the east and George Shervashidze III lane in the west. The distance from the site to Tbilisi is 12 kilometers (7 miles), to the international airport – 28 kilometers (17 miles), to the railway station – 12 kilometers (7 miles), and to the historic part of Tbilisi (the Old Town and Abanotubani district) – 14 kilometers (8.5 miles). 

The dachas are surrounded by green trees, the settlement main street lies 300 meters (1,000 feet) away and the bus station is even closer.

It is very easy to reach the settlement as there is a paved road leading to the place. This is a perfect site for hotel construction as there are no industrial activities there but only numerous coniferous trees, wonderful climate, and fresh air. 

Government cottages in Tskhneti: the purchase terms

The electronic auction that you can participate in to purchase the land lot with former government dachas in Tskhneti in order to build a hotel there is conducted under the following conditions:

• The starting price is 55,710,287 Georgian laris (approximately 19.5 million US dollars);
• The minimal bid step is 20,000 laris (approximately US$ 7,000);
• The amount of the guarantee is 5,571,029 laris (approximately US$ 1,950,000). This amount can be supplied to Liberty bank in cash, with a plastic card, or by obtaining an electronic bank guarantee;
• The bank guarantee term is 77 calendar days.

In addition to the standard conditions, the auction participants have to meet a series of other requirements:

• Make the final payment for the lot within two months since the date of the auction completion. Otherwise, the auction results will be invalidated; 
• Build a hotel on the site within 36 months since the deal completion. We should note that the investor is not allowed to build residential accommodations on the site for the next thirty years;
• Invest into the hotel construction and territory development not less than 20,000,000 laris (approximately US$ 7,000,000). The VAT is not included in this amount;
• Supply a bank guarantee for 2,000,000 laris (approximately US$ 700,000) within one month since the date of the auction completion. The bank guarantee shall be issued by a Georgian bank for the term that exceeds the investment project term by four months (that is, the guarantee shall be issued for forty months);
• Sign the purchase agreement with the Georgian Assets and Development Department within 45 calendar days since the date of the auction completion. If the agreement is not signed within this timeframe, the results of the auction will be annulled.

You also have to bear in mind that part of the site shall be let on a lease. Besides, the use of two lots of 4,478 square meters (48,200 sq. ft.) and 69 square meters (742 sq. ft.) is limited by servitudes. In addition to that, there are power lines, sewage pipes, and Internet cables running through the site that are the property of the corresponding organizations. For this reason, the entire earthwork has to be submitted for approval to Tbilisi municipal authorities, Silk-Net Company, Georgian Water and Powers Ltd., and Telasi Plc.  

How to improve your chances for success in the privatization auction in Georgia

You can obtain high-quality full-range legal support during the auction participation from Offshore Pro Group. We will answer all your questions pertaining to the property for sale, prepare all the necessary documents, and organize a meeting (or meetings) with the Georgian Government officials if such a need arises.

It is easy to apply for our services:

1. Write to us to [email protected] and specify your contact details.  
2. Our experts will get back to you in order to discuss the auction details and find out about your preferences.
3. If you are ready to take part in the auction, you will have to cover the cost of our services that starts at 3,000 EUR.  

We are looking forward to a message from you to [email protected]. Please remember that when a piece of state property becomes privatized through an auction, the Government of Georgia puts another piece of property on the block. Thus, you can tell us what you are looking for and we will find the option that suits you best.