Issue 3, 2019. June-July

   

BATUMI AIMS TO CONTROL BUILDING BOOM WITH BETTER REGULATION

The Black Sea resort town is pulling in the reigns on construction as it prepares a city master plan.

Kay Undis


Soaring tourism in Georgia's glitzy, beachside town of Batumi has brought with it a construction boom. But now the question has arisen: is construction in Batumi booming too fast?

The general consensus of both real estate developers and citizens is, yes. The construction industry is outpacing tourism growth and apartments that were once booked through the summer have become unmarketable.

Concerns over market saturation are legitimate, but luckily the future of Batumi will not be limited to stucco buildings and ghost apartments. Thanks to efforts to mature the tourism market, there is a demand for better quality apartments and hotels that has not yet been capitalized on, and the government is working to ensure the city moves in this direction.

Picking 'low-hanging fruit' in Batumi

Twenty years ago Batumi was a very different place from the seaside casino resort town it is now.

Developers and citizens alike have described the former Batumi with less than flattering terms, the very least of which include "no electricity, no gas, and no water."

Batumi boasted historical sites and physical beauty, but it lacked the infrastructure to cater to the out-of-the-region, upper-middle class tourist. The city couldn't develop into a luxury tourism destination overnight, but there was still low hanging fruit to be picked.

After the Rose Revolution, the new Georgian government cleaned up the city - both in the hygienic and criminal sense - and built apartments and casinos to accommodate the regional tourist looking for a cheap vacation.

David Ruebush, director of real estate development firm Batumi Paradise, explains this phenomenon.

"Batumi's entire real estate market was designed for the family with a thousand dollars. You come over here, you get a cheap flat for twenty dollars a night, you spend some time on the beach, you eat in your apartment, because you can't afford to go to a restaurant, and then you go back home."

When Batumi's tourism economy started booming the real estate industry could not respond fast enough. Suddenly there were thousands of tourists coming to Adjara each year. The idea of the government and investors was to build, and to build fast.

The city developed to accommodate regional tourists, but without a vision for the city's aesthetic development, nor a plan for the maturation of the tourism economy. The 2017 UN report states "a big strategic issue for Batumi is the lack of general planning documents for the city's development. There is no Master Plan that integrates the strategic objectives for the city's future."

As a result, low-quality stucco high rises clutter Batumi's skyline. In downtown Batumi on Shartava Street hundreds more apartments will enter the market this year. Construction projects began around 10 years ago, without the foresight to anticipate a market saturated with thousands of apartments of the same style.

Today, this hyper-construction poses a danger to the economy. "Tourism is rising at about 18% a year in Adjara but real estate is doubling every year, so it is outpacing the rise of tourism," says David Ruebush.

Meanwhile urban planners like Suzanne Harris-Brandts, PhD candidate at MIT, claim poor design and low quality materials of these buildings deter buyers from an already saturated market:

"Floor plan layouts may be poorly considered, making interior spaces uncomfortable or less useful (too much hall space, columns in the wrong place, etc.), and thus undesirable to buyers."

Other buildings have poorly coordinated front entrance areas that are neither aesthetically pleasing nor functional-think turf, nonexistent lobbies, and coin slot elevators. Buildings that offer Western amenities, such as parking and mailboxes, are also few.

In black and white carcass buildings often too much freedom is left to individual buyers, whose construction decisions can affect the marketability of the entire building. For instance, most black carcass units do not have the infrastructure for cable TV, which means its installation is left to the buyer. This results in hallways webbed with wires and hodge podge modems that deter buyers.

Another frequent problem is developers rarely coordinate with each other in terms of how their respective projects may connect or block views. Often waterfront lots are divided in such a way that views become obstructed.

One strategy of real estate developers is to buy the backlot for cheaper, build and sell quickly before the next building comes up.

Since there is little commercial activity in the surrounding areas, these formerly seaview apartments become unmarketable.

If the government wants to improve the marketability of buildings some regulation and government censure over projects will be needed.

"Regulations for construction do exist in Batumi," explains Harris-Brandts, "but when they are breached, developers are not always effectively being punished,"

Unfortunately the same holds true for cultural heritage laws. Though there are rules defining a building of cultural heritage, citizens complain construction continues in historic parts of the city.

"The criteria defining a building of cultural heritage is not respected and the (Ministry of Culture and Monument Protection) claims the rules are not clear. They are very clear. Within a 150 radius of the object of cultural heritage there can't be any large scale projects," says Irma Zoidze, a local journalist and campaigner for preservation.

Activists worry if more is not done to protect the city's unique cultural heritage, Batumi risks losing the old world charm that draws foreign investment and international tourists to Georgia in the first place.

"We insisted that the municipal authorities come up with a city plan reflecting what specialists say about what parts of the city should be the old city-what kinds of buildings constitute the old city. This document should have already come into being, but it will take a while still."

Indeed, the future city plan offers hope. The Batumi City Hall promises urban development and the approval of projects will become more transparent.

Head of Architecture and Urban Planning at Batumi City Hall Mirian Metreveli says the municipality is currently conducting research that "will allow us to identify the major problems in [Batumi's] urban development. Only after that can we come up with a city plan."

Metreveli says that another important process is the creation of a clearer procedure to designate historical buildings and zones in the city.


Batumi aims for high-hanging fruit through regulation

Bitter experience with unaesthetic high rises and ghost apartments means the citizens of Batumi are suspicious of new construction projects, which are often protested. But real estate developer David Ruebush says Batumi's urban landscape is evolving in a positive direction to accommodate the maturing travel market.

Four years ago feasibility studies on the tourism market were conducted by firms in Turkey and London, which concluded Georgia had yet to capitalize on its potential for nature tourism, sports tourism, and cultural and heritage tourism.

To develop the sports tourism market, the construction of Batumi Stadium commenced on January 21 on the order of the local Ministry of Economy and Finance.

"This very important project will enable us to host very important events in Batumi," said Georgian PM Mamuka Bakhtadze.

"This is very important not only for sports events but to attract more tourists to the city and Adjara. In addition, we have plans to encourage the urban development of Batumi and to establish European standards. A stadium is a necessary attribute of any successful European city." Meanwhile, as the market shifts in this direction the government is starting to look for high-hanging fruit.

After a 2017 hotel fire tragedy, the government introduced new regulatory norms for construction in Georgia, which include stricter demands for fire safety standards.

"The government has implemented a lot of laws as far as building, fire, safety and precautions... So it's much better now. All these buildings that they're building right now in the future will be a lot better," says one aparthotel supervisor in Batumi.

Because of these stricter provisions, from 2016 to 2017 the total number of permits decreased from 303 to 284.

David Ruebush explains the government has done a lot to mature the market, but the demand has not been fully met by real estate developers.

"About 2.5 million tourists are coming to Adjara each year. 225,000 are now coming from America, Japan, South Africa, Australia, Saudi, Dubai, Lebanon - they have a budget of five to six thousand dollars.

They want to take tours. They don't want a 30 meter flat with everyone sleeping on cots, they want a nice room. So there's market demand for that now, and that demand is undersupplied."

Because of these shifts in the market, Batumi now awaits a variety of new projects: Rooms hotel Batumi, the University Tower Hotel, Ruebush Gardens, and the Silk Tower.

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