BUSINESS
Larization plan of Georgia: Price of property sale to be restricted in dollars
29 December, 2016
A new law will come into force from July 1, according to which the price of the sale of the property or services will be made mandatory in Georgian national currency. This will concern the advertising law and accordingly, the real estate advertising price should be fixed in Georgian laris. However, this law does not imply a commitment to fix prices in national currency in contracts as well. The initiators of the law say the change is part of the
larization plan and it will allow buyers to better plan and calculate their finances.

This new initiative is positively assessed by representatives of construction sector. "Arsi" company’s Chief Financial Officer and Chairman of Developers Association Mr. Abuladze tells Allnews.ge that fixing prices in GEL should be the first step and in the future it must be spread on contracts as well.

"I think that it is the right thing to sell in GEL and I hope that this is only the first step. So far, it refers only to the advertising law and we are not obliged to include the GEL price in the contracts. In the future, this should be the case as well. Under the new law, I am obliged to announce the price in laris, but when a real client appears, I can fix the price in dollars.

Anyway, this is a very good step forward.”

According to him, this novelty is definitely good for customers because the exchange rate changes greatly impacts anyone who has the income in laris, but pays loans or a flat tax in dollars.

Lela Arabuli, the editor of of ‘Sitkva da Sakme’ newspaper appreciates the change as well. She says that the neighboring countries fix prices of real estate in national currencies and that must be the case in Georgia as well.

"This will not lead to any problems if both the clients and the investors are prepared well. In my opinion, it is desirable that the bill be paid in laris too. After this novelty enters into force, the prices will have to be regulated. However, it was not be very complicated" – Arabuli said.

Beka Kurtskhalia has been building houses at his own expense for several years already, to later rent or lease them out.

He thinks the main obstacle for him now is the devaluation of national currency and decreasing prices on real estate. Kurtskhalia says the amendment will protect the business, decrease the risks and make the business more stable.

However, the new law has led to contradictory opinions among experts as some of them think that the prices may become more unstable that will lead to more inflation.

"Currency risk will move from consumers to businessmen, because the latters have to pay in dollars. Eventually, to back themselves up, they are going to seek more profut in laris than they used to in dollars. To some extent, this will cause the increase of prices. On the other hand, the prices will fluctuate, because it will change depending on what will be GEL exchange rate against the dollar’ – Besarion Namchavadze explains.

The Deputy Finance Minister, however, thinks that this amendment will bring positive results in various directions.

‘The advertisement of real estate must be in national currency. This is very important for our citizens, because their income is in national currency as well. They have to be able to compare the prices to their incomes. The fluctuation of exchange rate, of course, creates problems for real estate business. If Georgian lari devaluates, real estate prices decrease and vice versa. After this law comes into force, the customers will not be depended on exchange rate’, - Nikoloz Gagua, the Deputy Finance Minister says.

The law will enter into force beginning from July 1, 2017.

By Nana Mghebrishvili for Allnews.ge
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