Dateline: Tbilisi, Georgia
“Do you know anyone who can help with…”
Thus begin many of the questions I’m asked by people interested in doing business in the emerging world. Here in Tbilisi in the Republic of Georgia, opportunity is rampant. In an odd and rare form of Shangri-la for entrepreneurs, the government moves with greater efficiency than most businesses.
Like many countries in emerging Europe, Georgia is missing many of the creature comforts that you likely take for granted. There’s no Starbucks, no Amazon, few healthy juice bars, and a small but growing number of trendy hotels and restaurants. However, thanks to all that, the opportunities for a young, ambitious entrepreneur to come here with little capital are excellent.
One particular area where real opportunity for big money exists is in real estate. The country just got its first MLS, and only 28 brokers are participating. Old habits die hard. Unlike the workaholic real estate agents in the west, brokers here are often inaccessible and don’t possess a strong command of the market.
When I first started investing here, a company called Realtors.ge was in business with a mission to serve foreign investors with a western-quality website, English-language agents, and more boutique listings. The effort eventually failed — not due to a lack of market demand — but due to partners who couldn’t overcome their cultural instincts of selling property to westerners the way they would to a local.
Heck, in just the last three months I’ve seen more sales signs in Arabic (and more real estate agencies serving only Arabic clients) than I have in other promising countries in years.
The Gulf countries are investing heavily in Georgia, including the new “six-star” Biltmore Hotel that practically bounces you out the front door if you look western.
Be the person who can help with…
And therein lies the opportunity that leads so many people to ask “do you know anyone who can help?” Georgia is a promising real estate market without a support system. There is plenty of investment regionally and I believe soon to be internationally. However, the country has grown far too quickly for locals to catch up and adapt to a more international sales style.
Here at Nomad Capitalist, I’ve brought a number of investors to Georgia who want to buy income properties. These investors are pleased to discover they can often double the yields they’re used to at home, all with near-zero property taxes and very little red tape.
“So who will handle property management?”, they ask. Of course, I can offer the help of a part-time employee who speaks Georgian and can arrange showings. However, if a faucet breaks or they want to evict a tenant, they’d need an attorney, or to do it themselves.
For other investors who desire turnkey properties to rent, inventory is low and prices — set by locals who typically don’t understand contemporary western decor — are high. I purchased a hot mess of a property near the city center for $47 per square foot, only to see several well-renovated properties selling for nearly three times that price.
For a foreign investor not looking to live here, who would manage the renovation, regardless of how cheap it is? Why can’t someone just sell turnkey properties?
Wide-open business opportunity
In an emerging market like Georgia, potential is rampant, as is the opportunity to participate in it. Offering English speakers a central point of contact for acquiring, renovating, and managing property is a wide-open opportunity here and in other countries I frequent.
Many investors want to do business with someone who speaks their language, both literally and figuratively. While I prefer to shake every dollar out of a deal by adapting to local culture, most investors would prefer still-excellent returns combined with the confidence of a familiar voice.
Chinese investors realize that all over the world. Russian investors realize that in countries like Montenegro. Arab investors are realizing it here. The same trend is true among Americans who flock to South American countries and gladly overpay by 25% because the real estate firm has “American” in its name, just because they’re afraid of real
Helping foreign investors acclimate to seemingly confusing new markets is an excellent way to take part in the rapid growth of an emerging market. Here in Georgia, acclimating yourself is easy, with a country that loves foreigners, and Americans in particular, and a government that is as efficient as any other on earth.
So, is this the perfect emerging market business opportunity for you? I’ll let you decide.