Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697748957871.pdf (Georgia)
2021 STARTED WEAK FOR TBILISI RESIDENTIAL REAL ESTATE MARKET AS THE MORTGAGE SUBSIDY PROGRAM HAS ENDED; GIVEN THE CHALLENGING MACRO CONDITIONS FURTHER ADJUSTMENT IN PRICES IS LIKELY 2 NEWLY ISSUED MORTGAGES AT TBC*, YOY CHANGE % GEL/USD AND REAL ESTATE PRICES IN USD 60% 20% -20% -60% -100% -15.3% Mortgage dynamics has weakened after subsidy program ended… -43.7% 0 2 - r a M 0 2 - r p A 0 2 - y a M 0 2 - n u J 0 2 - l u J 0 2 - g u A 0 2 - p e S 0 2 - t c O 0 2 - v o N 0 2 - c e D n a J 4 1 - 1 n a J 5 2 - 5 1 Price adjustment in 2020 likely fairly reflects the GEL depreciation effect… • Based on the initial indicators, Tbilisi residential real estate GEL/USD price in USD -19.2 -25.7 0.9 -11.6 market showed weak start in 2021 pressured by overall challenging economic environment and finalization of the -6.8 -12.3 mortgage subsidy program • With only moderate decrease expected in monetary policy rate (see more in December Macro-Sectoral Overview), further boost of housing demand from low GEL interest rates is unlikely, while the acceleration of lending in FX mortgages From Oct-14 to Oct-16 From Jan-18 to Jan-20 From Jan-20 to Dec-20 may provide some upside for the market TBILISI RESIDENTIAL REAL ESTATE TRANSACTIONS, YOY CHANGE % GDP GROWTH AND REAL ESTATE PRICES IN GEL, ADJUSTED FOR INFLATION 20% -20% -60% -100% …but effect of weaker demand is still not fully priced in -9% -22% GDP growth Inflation adjusted price in GEL 10.1 …so did the growth in residential real estate transactions 6.0 3.2 5.0 4.6 -6.2 0 2 - r a M 0 2 - r p A 0 2 - y a M 0 2 - n u J 0 2 - l u J 0 2 - g u A 0 2 - p e S 0 2 - t c O 0 2 - v o N 0 2 - c e D n a J 4 1 - 1 n a J 1 2 - 5 1 From Oct-14 to Oct-16 From Jan-18 to Jan-20 From Jan-20 to Dec-20 • • Around 7% YoY price decrease on residential real estate in Tbilisi over 2020 is likely sufficient to accommodate the effect of weaker GEL.
However, sluggish demand is likely to put further downside pressure on prices Unlike the previous episodes, weaker GDP growth has not yet been translated in adjustment of real prices** and we see further downside of around 4-6% in real prices.

On the upside, quicker than expected economic recovery (Baseline +4.2% GDP growth in 2021), GEL strengthening can cushion the pressure on prices Source: TBC Bank, NAPR, NBG, Geostat, TBC Capital; *Excl.
refinancing of mortgages **Real estate prices in GEL adjusted for inflation (i.e.

real prices) should better reflect the effect of demand.
ECONOMIC ACTIVITY AND LABOR MARKET WEAKENED FURTHER; USD/GEL EXCHANGE RATE REMAINED STABLE WHILE SOME OF THE ECONOMIC PARTNER CURRENCIES STRENGTHENED AGAINST THE USD INDICATING THAT THE GEL LIKELY REMAINS UNDERVALUED 3 REAL GDP GROWTH (YOY, %) NUMBER & WAGE OF HIRED EMPLOYEES* (YOY, %) USD/GEL & PARTNER CURRENCY FX RATES VS USD* 10 5 0 -5 -10 -15 5.0 2.3 -3.9 -5.6 9 1 0 2 0 2 - 1 Q -13.2 0 2 - 2 Q 0 2 - 3 Q 0 2 - t c O -7.7 0 2 - v o N 25 20 15 10 5 0 -5 -10 -15 Number of hired employees Wage received by hired employees USD/EUR USD/TRY USD/RUB USD/AMD USD/GEL USD/CNY USD/AZN USD/UAH 150 140 130 120 110 100 90 80 0 2 - n a J 0 2 - b e F 0 2 - r a M 0 2 - r p A 0 2 - y a M 0 2 - n u J 0 2 - l u J 0 2 - g u A 0 2 - p e S 0 2 - t c O 0 2 - v o N 0 2 - c e D 0 2 - n a J 0 2 - b e F 0 2 - r a M 0 2 - r p A 0 2 - y a M 0 2 - n u J 0 2 - l u J 0 2 - g u A 0 2 - p e S 0 2 - t c O 0 2 - v o N 0 2 - c e D 1 2 - n a J KEY BOP ITEMS (YOY, %, IN USD) BUSINESS AND CONSUMER CONFIDENCE INDICES INFLATION AND GEL POLICY RATE (%) 40 20 0 -20 -40 -60 -80 -100 Exports Imports Remittances Tourism 0 2 - n a J 0 2 - b e F 0 2 - r a M 0 2 - r p A 0 2 - y a M 0 2 - n u J 0 2 - l u J 0 2 - g u A 0 2 - p e S 0 2 - t c O 0 2 - v o N 0 2 - c e D 100 80 60 40 20 0 -20 -40 -60 -80 -100 Business Confidence Index Consumer Confidence Index 0 10 9 8 7 6 5 4 3 2 1 0 -10 -20 -30 -40 -50 -60 4 1 - n a J 4 1 - n u J 4 1 - v o N 5 1 - r p A 5 1 - p e S 6 1 - b e F 6 1 - l u J 6 1 - c e D 7 1 - y a M 7 1 - t c O 8 1 - r a M 8 1 - g u A 9 1 - n a J 9 1 - n u J 9 1 - v o N 0 2 - r p A 0 2 - p e S Source: RS, NBG, ISET-PI, Geostat, GNTA, TBC Capital; *Revenue Service data reflects individuals paying income tax CPI inflation Policy rate 8 1 - b e F 8 1 - r p A 8 1 - n u J 8 1 - g u A 8 1 - t c O 8 1 - c e D 9 1 - b e F 9 1 - r p A 9 1 - n u J 9 1 - g u A 9 1 - t c O 9 1 - c e D 0 2 - b e F 0 2 - r p A 0 2 - n u J 0 2 - g u A 0 2 - t c O 0 2 - c e D 4.3% • Economic growth dynamics worsened noticeably in November, mainly due to the worsened epidemiological
 situation and respective mobility restrictions.
In particular, GDP drop accelerated to 7.7% YoY compared to a 3.9% YoY decrease in October • Over the last month the USD/GEL remained mostly stable at around 3.3.

At the same time, most of the regional currencies strengthened or remained stable as well against the USD.

USD/TRY and USD/RUB appreciated by 4.7% and 0.68%, respectively, whereas, USD/AZN and USD/AMD depreciated slightly.

As a result, the GEL NEER depreciated by 1.1% over the last month.
The NBG remained active on the FX market, selling in total 110mln USD since previous publication • As expected amid tightened mobility restrictions in trading partner economies, export inflows decreased by 17.7% YoY in December after a 13.4% YoY drop in November.

Growth rate of imports remain in negative territory with 17.9% YoY decrease, reflecting weak aggregate demand.
Remittance inflows continued a positive growth at a rate of 15.9% YoY, higher than in the previous month • Annual inflation stood at 2.4% in December, down from 3.8% in the previous three consecutive months.
Excluding the one- off effect of utility payment subsidy, CPI inflation came in at SUPPLY • • • • • CONSTRUCTION PERMIT ISSUANCE REMAINED SOLID IN TBILISI, SUGGESTING THE SUPPLY WILL REMAIN STRONG IN THE COMING YEARS IN 2020, TBILISI SAW 208 NEW APARTMENT BLOCK PERMITS, ACCOUNTING FOR UP TO 1.1 MLN SQM RESIDENTIAL SPACE (+16% YOY) INCREASE IN CONSTRUCTION PERMIT ISSUANCE WAS MOSTLY ATTRIBUTABLE TO GROWTH IN THE SUBURBAN DISTRICTS 1.18 MLN SQM RESIDENTIAL AREA CURRENTLY AVAILABLE ON PRIMARY MARKET, UNDER PERMITS ISSUED SINCE 2016 23% OF THIS OUTSTANDING STOCK IS IN DIDI DIGHOMI, FOLLOWED BY SABURTALO (19%), ISANI (13%) AND GLDANI (11%) CONSTRUCTION PERMIT ISSUANCE REMAINED SOLID IN TBILISI, SUGGESTING THE SUPPLY WILL REMAIN STRONG IN THE COMING YEARS 5 PERMITS ISSUED FOR RESIDENTIAL CONSTRUCTION IN TBILISI (AREA, UNITS) M Q S 0 0 0 , 1 1,200 1,000 800 600 400 200 - 213 952 82 238 Permits issued - Sqm (LH) Permits issued - Units (RH) 265 271 264 299 874 972 990 1,049 205 208 912 1,054 149 562 350 300 250 200 150 100 50 - 2012 2013 2014 2015 2016 2017 2018 2019 2020 LIVING AREA OF PERMITS ISSUED FOR RESIDENTIAL CONSTRUCTION IN TBILISI (MONTHLY CUMULATIVE) 2013 2017 2014 2018 2015 2019 2016 2020 M Q S 0 0 0 , 1 1,200 1,000 800 600 400 200 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Tbilisi City Hall, TBC Capital • Despite a slow-down in economic activity, permits for residential construction remained solid.
In 2020, Tbilisi saw 208 newly issued building permits for multi-apartment and multi-functional blocks, accounting for up to 1.1mln Sqm residential space (+16% YoY) • Notably, permit issuance had somewhat slowed down in Q3, but picked up again in Q4.
While the residential space approved for construction in 2020 surpassed that of previous years, this was not a case for number of permits, meaning more large-scale projects in the pipeline INCREASE IN CONSTRUCTION PERMIT ISSUANCE WAS MOSTLY ATTRIBUTABLE TO GROWTH IN THE SUBURBAN DISTRICTS 6 PERMITS ISSUED FOR RESIDENTIAL CONSTRUCTION IN TBILISI (UNITS): 2015-2020 80 70 60 50 40 30 20 10 - 252 350 300 250 200 150 100 50 0 i m o h g D i i i d D 55 2015-2019 2020 34 27 23 23 13 12 9 • The districts with the largest number of apartment transactions are also the ones where the new supply is concentrated.
Didi Dighomi, Saburtalo and Gldani account for 57% of total residential space approved for 6 5 1 construction in 2020 PERMITS ISSUED FOR RESIDENTIAL CONSTRUCTION IN TBILISI (AREA, 000’ SQM): 2015-2020 • Notably, increase in construction permit issuance was mostly attributable to growth in the suburban districts, while decrease was observed in the central districts.
In 167 157 126 91 74 67 66 2015-2019 2020 2020, the construction area was up in Didi Dighomi (+18% YoY), Gldani (+32% YoY), Didube (+224% YoY) and Nadzaladevi (+70% YoY), down in Saburtalo (-13% YoY) and Vake (-43% YoY).
Area approved for construction also declined in Samgori and Isani, down by 30% YoY and 39 e k a V 10 6 by 2% YoY, respectively i t e r u h g u h C i a d n m s t a t M Source: Tbilisi City Hall, TBC Capital; *Growth attributable to large-scale project permits; Note: Distribution of permits by districts differs from figures in previous publication, reflecting an improved district classification methodology 1.18 MLN SQM RESIDENTIAL AREA CURRENTLY AVAILABLE ON PRIMARY MARKET, UNDER PERMITS ISSUED SINCE 2016 7 PRIMARY MARKET: RESIDENTIAL AREA (000’ SQM) OF 2016-2020 PERMITS: SOLD & STOCK CURRENT RESIDENTIAL AREA (SQM) STOCK BY DISTRICTS FROM 2016-2020 PERMITS 1,000 900 800 700 600 500 400 300 200 100 - 78% 72% 53% 33% 10% 190 250 Area sold in active constructions* Area stock in active constructions* Area stock in expected additional constructions* % of area sold 160 590 680 630 210 350 240 170 2016 permits 2017 permits 2018 permits 2019 permits 180 20 2020 permits 200% 150% 100% 50% 0% Krtsanisi, 42 , 3% Mtatsminda, 13 , 1% Nadzaladevi, 56 , 5% Didube, 88 , 7% Vake, 91 , 8% Samgori, 113 , 10% C. 1.18 Mln Sqm Gldani, 134 , 11% Isani, 149 , 13% Didi Dighomi, 266 , 23% Saburtalo, 228 , 19% • • • Of permits issued in 2016-2020 period, 2.92mln Sqm residential area was identified as constructed or under construction*, with estimated 0.75mln Sqm more under current 2019-2020 permits expected to become active, as we expect the first pre-sale on average a year after the issuance of permit Under active permits issued in 2016-2020 period, sold area accounts for 60% of active projects, with the proportion highest in 2016, declining to 10% for the permits issued in 2020, as most of the pre-sales have not yet started Didi Dighomi leads the grid with estimated 266 thousand Sqm, or 23% of total stock outstanding, followed by Saburtalo, Isani and Gldani with 19%, 13% and 11% of total stock, respectively, located in these districts.
Area under active permits prior to 2016 is essentially sold out Source: Tbilisi City Hall, TBC Capital; *If at least a single sale from the project is registered in NAPR, the project is deemed active DEMAND • • • • • THE RECOVERY OF DEMAND IN H2 2020 WAS STRONGLY BACKED BY THE GEL MORTGAGES; IN CASE OF DELAYED ECONOMIC RECOVERY, RESTART OF THE PROGRAM BECOMES MORE LIKELY TBILISI’S RESIDENTIAL SALES DECLINED BY 22% YOY IN 2020, WITH DECREASE STANDING AT -17% YOY FOR NEW PROPERTIES AND AT -29% YOY FOR OLDER UNITS IN DECEMBER, 3,018 RESIDENTIAL PROPERTY TRANSACTIONS WITH A TOTAL OF 208,411 SQM AREA WERE REGISTERED IN TBILISI, WITH GROWTH RATES OF -1.3% AND -0.9% YOY, DOWN FROM 8.0% AND 3.0% YOY IN NOVEMBER SHARE OF NEW APARTMENTS INCREASED IN DECEMBER, AS COMPARED TO NOVEMBER SALES DOWN IN ALL DISTRICTS IN 2020, WITH GLDANI DISPLAYING THE MOST RESILIENCE, FOLLOWED BY NADZALADEVI AND SAMGORI THE RECOVERY OF DEMAND IN H2 2020 WAS STRONGLY BACKED BY THE GEL MORTGAGES, IN CASE OF DELAYED ECONOMIC RECOVERY, RESTART OF THE PROGRAM BECOMES MORE LIKELY 9 ISSUED MORTGAGES TO TRANSACTION VALUE*, TBILISI YOY GROWTH OF MORTGAGE PORTFOLIO AND CONTRIBUTION TO GROWTH BY CURRENCIES Transaction value (mln GEL) Value of mortgages issued (mln GEL, excl.
refinancing) Proportion (%) 1,800 1,600 1,400 1,200 1,000 800 600 400 200 - MORTGAGE AND DEPOSIT RATES DYNAMICS IN GEORGIA 25% 80% 50% 50% 20% 40% 30% 20% 10% 0% -10% -10% -20% GEL USD EUR Total • Mortgage portfolio increased by 12.1% YoY over 2020 at constant currency terms, almost fully driven by the mortgages in national currency strongly supported by the mortgage subsidy program.
As of December 2020 share of subsidized mortgages made up around half of total new issuances.
9 1 - n a J 9 1 - b e F 9 1 - r a M 9 1 - r p A 9 1 - y a M 9 1 - n u J 9 1 - l u J 9 1 - g u A 9 1 - p e S 9 1 - t c O 9 1 - v o N 9 1 - c e D 0 2 - n a J 0 2 - b e F 0 2 - r a M 0 2 - r p A 0 2 - y a M 0 2 - n u J 0 2 - l u J 0 2 - g u A 0 2 - p e S 0 2 - t c O 0 2 - v o N 0 2 - c e D • Share of mortgages in residential real estate transaction value in Tbilisi exceeded 50% in SHARE OF SUBSIDIZED MORTGAGES IN NEW ISSUANCES AT TBC the second half of 2020, as subsidy program FX Mortgage rate GEL Mortgage rate GEL LT Deposit rate FX LT Deposit rate Monetary policy rate Rental yield 37% 33% 32% 20% 15% 10% 5% 0% supported mortgage growth and real estate 48% sales.
38% • Finalization of the subsidy program poses risks to the continued recovery of the real estate market, especially if economic recovery gets delayed.
In such a scenario we think that the restart of the mortgage subsidy program becomes more likely 6 1 - b e F 6 1 - r p A 6 1 - n u J 6 1 - g u A 6 1 - t c O 6 1 - c e D 7 1 - b e F 7 1 - r p A 7 1 - n u J 7 1 - g u A 7 1 - t c O 7 1 - c e D 8 1 - b e F 8 1 - r p A 8 1 - n u J 8 1 - g u A 8 1 - t c O 8 1 - c e D 9 1 - b e F 9 1 - r p A 9 1 - n u J 9 1 - g u A 9 1 - t c O 9 1 - c e D 0 2 - b e F 0 2 - r p A 0 2 - n u J 0 2 - g u A 0 2 - t c O 0 2 - c e D Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Source: NAPR, NBG, TBC Capital; *Note: The chart depicts a proportion of all mortgage loans issued, net of refinancing (TBC Capital estimates), in the period to the proportion of real estate market turnover in Tbilisi TBILISI’S RESIDENTIAL SALES DECLINED BY 22% YOY IN 2020, WITH DECREASE STANDING AT -17% YOY FOR NEW PROPERTIES AND AT -29% YOY FOR OLDER UNITS 10 NUMBER OF SOLD APARTMENTS (000’ UNITS) NUMBER OF SOLD APARTMENTS (000’ UNITS) Old apartments New apartments New apartment % of total 70% 65% 36.8 36.5 -22% 60% 26.5 14.0 13.9 28.6 9.8 55% 50% 22.7 22.7 18.8 45% 40% 22.1 10.1 12.0 11.2 15.2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 2017 2018 2019 2020 YOY CHANGE (%) IN NUMBER OF TRANSACTIONS TOTAL AREA OF SOLD APARTMENTS (000’ SQM) 40% 20% 0% -20% -40% -60% -80% -100% Total New apartments Old apartments 5% -1% -14% 4,000 3,500 3,000 2,500 2,000 1,500 1,000 Old apartments New apartments New apartment % of total 70% 65% 1,786 692 1,538 614 500 924 1,095 - 2,544 2,524 -23% 60% 923 923 1,946 659 55% 50% 1,621 1,601 1,288 45% 40% 2016 2017 2018 2019 2020 9 1 - n a J 9 1 - b e F 9 1 - r a M 9 1 - r p A 9 1 - y a M 9 1 - n u J 9 1 - l u J 9 1 - g u A 9 1 - p e S 9 1 - t c O 9 1 - v o N 9 1 - c e D 0 2 - n a J 0 2 - b e F 0 2 - r a M 0 2 - r p A 0 2 - y a M 0 2 - n u J 0 2 - l u J 0 2 - g u A 0 2 - p e S 0 2 - t c O 0 2 - v o N 0 2 - c e D Source: NAPR, TBC Capital; *New apartment means an apartment
 built with construction permits issued since 2010 • In 2020, Tbilisi residential market featured circa 28,600 transactions with a total of circa 1.9mln Sqm area, down by -22% and -23% YoY, respectively.
The year marked -17% YoY decrease of new property transactions, while sales of older properties declined to a greater extent (-29% YoY) • • Circa 18,800 units, encompassing over 1.2mln Sqm area sold in 2020 were new* apartments, while circa 9,800 units, constituting 659,000 Sqm area sold in 2020 were old apartments Following the transaction increase in November, Tbilisi residential market posted a marginal decrease in December 2020.
The market featured up to 3 thousand residential property transactions (-1% YoY) with over 208 thousand Sqm area sold.

Notably, the transaction volume stood marginally higher than in the previous month • Standing at -14% YoY, the transaction growth rate of old apartments drove the decrease of total transactions in December.
Notably, number of new apartment transactions increased by 5% YoY in the same month SHARE OF NEW APARTMENT TRANSACTIONS UP IN DECEMBER 11 NUMBER OF SOLD APARTMENTS (000’ UNITS) New apartments Old apartments New apartment share (%) -10000% 0.9 1.1 0.9 -20000% 1.1 -30000% 2.1 1.6 1.8 1.6 1.9 2.1 2.1 2.2 2.0 1.7 2.0 2.1 - Jan 9 1 0 2 0 2 0 2 Feb 9 1 0 2 0 2 0 2 Mar 9 1 0 2 0 2 0 2 Apr TOTAL AREA OF SOLD APARTMENTS (000’ SQM) 68% 65% 65% 66% 64% 65% 64% 71% 68% 68% 67% 64% 67% 63% 62% 66% 64% 67% 62% 66% 62% 69% 65% 68% 0% New apartments Old apartments New apartment share (%) 204 66 168 59 197 202 68 69 201 72 175 62 187 67 139 109 129 133 129 113 121 9 1 0 2 0 2 0 2 Jan 9 1 0 2 0 2 0 2 Feb 9 1 0 2 0 2 0 2 Mar Source: NAPR, TBC Capital 13 0 2 0 2 9 1 0 2 Apr May 225 74 151 154 55 99 9 1 0 2 0 2 0 2 Jun 221 73 176 65 196 74 158 53 207 219 73 74 229 221 86 75 194 200 73 62 -10000% 210 208 -20000% 73 66 -30000% 148 111 123 105 133 146 142 147 121 138 138 142 -40000% 9 1 0 2 0 2 0 2 Jul 9 1 0 2 0 2 0 2 9 1 0 2 0 2 0 2 Aug Sep 9 1 0 2 0 2 0 2 Oct 9 1 0 2 0 2 0 2 -50000% 9 1 0 2 0 2 0 2 Nov Dec 0.3 0.5 0 2 0 2 9 1 0 2 May 251 81 170 9 1 0 2 51 16 35 0 2 0 2 9 1 0 2 0 2 0 2 Jun 9 1 0 2 0 2 0 2 Jul 9 1 0 2 0 2 0 2 Aug -50000% • Compared to November, the proportion of new apartments was up marginally by 0.6pp in December Sep Oct Nov Dec 2020, standing at 69.1% (+4pp YoY) as measured by the number of units, at 68.2% (+3pp YoY) as measured by total area of sold apartments RESIDENTIAL PROPERTY TRANSACTIONS DOWN IN ALL DISTRICTS IN 2020, WITH GLDANI DISPLAYING THE MOST
 RESILIENCE, FOLLOWED BY NADZALADEVI AND SAMGORI 12 NUMBER OF SOLD APARTMENTS (000’ UNITS) s d n a s u o h T 9 8 7 6 5 4 3 2 1 - -31% -25% -1% New apartments Old apartments YoY change in 2020 -16% -19% -14% -17% -28% -35% -42% -35% 0% -10% -20% -30% -40% -50% -60% -70% -80% -90% -100% • Sales in units were down in all districts in 2020, with the sharpest declines of sold properties observed in Chughureti (-42% YoY), Mtatsminda (-35% YoY), Krtsanisi (-35% YoY) and Saburtalo (-31% YoY • Gldani, Nadzaladevi and Samgori were relatively Saburtalo Didi Dighomi Gldani Samgori Isani Nadzaladevi Didube Vake Krtsanisi Chughureti Mtatsminda resilient.
In these districts, number of transactions TOTAL AREA OF SOLD APARTMENTS (000’ SQM) 700 600 500 400 300 200 100 - 4% -32% -27% -16% -20% -17% -16% -30% -39% -43% -33% New apartments Old apartments YoY change in 2020 • • 20% 0% -20% -40% -60% -80% -100 Saburtalo Didi Dighomi Gldani Samgori Isani Nadzaladevi Didube Vake Krtsanisi Chughureti Mtatsminda Source: NAPR, TBC Capital decreased by 1% YoY, 14% YoY and 16% YoY, respectively In absolute, Saburtalo and Didi Dighomi still lead the sales.
Together, the two districts accounted for 35% of total residential space sold in Tbilisi in 2020 Chughureti, Mtatsminda and Krtsanisi are the least active districts, with 39 thousand, 50 thousand and 50 thousand Sqm residential area sold in 2020, respectively SHARES OF PREMIUM SEGMENT AND LARGE PROPERTY SALES FELL IN 2020, MORE EVIDENT IN NEW APARTMENT TRANSACTIONS 13 NEW APARTMENTS (PRICE CATEGORY BY SQM*) NEW APARTMENTS (AREA, SQM) NEW APARTMENTS - 2020 (AREA, SQM) Low Mid Premium <50 50-70 70-100 100< i m o h g D i i i d D i r o g m a S <50 i n a s I i l v e d a a z d a N 50-70 70-100 100-150 150< OLD APARTMENTS (PRICE CATEGORY BY SQM*) 100% 8% 7% 8% 9% 8% OLD APARTMENTS (AREA, SQM) OLD APARTMENTS - 2020 (AREA, SQM) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Low Mid Premium <50 50-70 70-100 100< Source: NAPR, TBC Capital; *Note: Low segment (< USD 800/Sqm), Mid segment (USD 800-1200/Sqm), Premium segment (> USD 1,200 Sqm <50 50-70 70-100 100-150 150< 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% • The share of premium segment properties stood at 9% for new property and at 8% for old property transactions in 2020, down from 12% and 9%, respectively • In 2020, purchased residential space averaged at 68 Sqm in
 Tbilisi, 1 Sqm lower compared to that of 2019 • The proportion of large property transactions (>100 Sqm) declined to 10% from 13% for new properties, remaining unchanged for older units • New properties with larger than 100 Sqm area accounted for 39% of the sales in Mtatsminda and 34% in Vake, while new units with <50 Sqm space constituted 37% of the transactions in Didi Dighomi and in Samgori PRICES • • COMPARED TO Q3, AVERAGE SELLING PRICE MARGINALLY UP FOR BOTH NEW AND OLD APARTMENTS IN Q4 2020 COMPARED TO JANUARY, MONTHLY RENTAL ASKING PRICES FOR RESIDENTIAL PROPERTIES ARE DOWN BY 26% IN TBILISI • RENTAL YIELD IS ON DECLINE, STANDING AT 7.0% IN DECEMBER, BELOW ITS LONG-TERM TREND COMPARED TO Q3, AVERAGE SELLING PRICE MARGINALLY UP FOR BOTH NEW AND OLD APARTMENTS IN Q4 2020 15 APARTMENT TRANSACTIONS – AVERAGE SALES WEIGHTED PRICE PER SQM (USD) APARTMENT TRANSACTIONS – AVERAGE SALES WEIGHTED PRICE PER SQM (GEL) 850 800 750 700 650 600 550 New apartments USD Old apartments USD All apartments USD 742 739 704 707 629 641 8 1 0 2 2 Q 8 1 0 2 3 Q 685 656 607 8 1 0 2 1 Q 694 690 678 650 8 1 0 2 4 Q 667 623 9 1 0 2 1 Q 752 713 637 9 1 0 2 2 Q 721 728 728 706 718 693 689 630 9 1 0 2 3 Q 695 700 637 647 665 675 613 616 9 1 0 2 4 Q 0 2 0 2 1 Q 0 2 0 2 2 Q 0 2 0 2 3 Q 689 629 0 2 0 2 4 Q 2,600 2,400 2,200 2,000 1,800 1,600 1,400 1,200 New apartments GEL Old apartments GEL All apartments GEL NEW APARTMENTS – AVERAGE SALES WEIGHTED PRICE PER SQM (USD) OLD APARTMENTS – AVERAGE SALES WEIGHTED PRICE PER SQM (USD) Q3 2019 - Q3 2020 Q4 2020 1,400 1,200 1,000 800 600 400 200 - i a d n m s t a t M e k a V l o a t r u b a S i s
Source: NBG, NAPR, TBC Capital 1,400 1,200 1,000 800 600 400 200 - i n a d G l i r o g m a S Q3 2019 - Q3 2020 Q4 2020 RENTAL PRICE AND YIELD CONTINUE TO DECLINE IN TBILISI 16 RESIDENTIAL: MONTHLY RENT PRICES (USD/SQM) JAN-DEC 2020 COMMERCIAL: MONTHLY RENT PRICES (USD/SQM) JAN-NOV 2020 AVERAGE RENTAL YIELD OF RESIDENTIAL PROPERTIES (%) 12% 11% 10% 9% 8% 7% 6% 5% 4% 16 14 12 10 • Monthly rental asking prices continued to decline in December, averaging USD 4.5 per Sqm (-2% MoM) for residential units.
In the same period, rental price stood at USD 7.7 per Sqm (+17% MoM) for commercial units in Tbilisi • Compared to Jan 2020, monthly rental asking prices are down 26% for residential units in Tbilisi, whereas commercial properties display 21% decrease over the same period • According to the NBG, the rental yield in Tbilisi stood at 7.0% in December, down from 7.1% in the previous month, falling even lower compared to its long-term trend (8.3%) i n a d G l i r o g m a S i l v e d a a z d a N 7.0% 5 0 - b e F 5 0 - l u J 5 0 - c e D 6 0 - y a M 6 0 - t c O 7 0 - r a M 7 0 - g u A 8 0 - n a J 8 0 - n u J 8 0 - v o N 9 0 - r p A 9 0 - p e S 0 1 - b e F 0 1 - l u J 0 1 - c e D 1 1 - y a M 1 1 - t c O 2 1 - r a M 2 1 - g u A 3 1 - n a J 3 1 - n u J 3 1 - v o N 4 1 - r p A 4 1 - p e S 5 1 - b e F 5 1 - l u J 5 1 - c e D 6 1 - y a M 6 1 - t c O 7 1 - r a M 7 1 - g u A 8 1 - n a J 8 1 - n u J 8 1 - v o N 9 1 - r p A 9 1 - p e S 0 2 - b e F 0 2 - l u J 0 2 - c e D Source: Myhome.ge, NBG A SHARP DROP IN NUMBER OF ACTIVE LISTINGS ON AIRBNB, SHARE OF BOOKED PROPERTIES AND MARKET REVENUE 17 TBILISI AIRBNB MARKET: BOOKING RATE (%) Properties booked Properties not booked Share of booked properties - 9 1 - n a J 0 2 - n a J 9 1 - b e F 0 2 - b e F 9 1 - r a M 0 2 - r a M 9 1 - r p A 0 2 - r p A 9 1 - y a M 0 2 - y a M 9 1 - n u J 0 2 - n u J 9 1 - l u J 0 2 - l u J 9 1 - g u A 0 2 - g u A 9 1 - p e S 0 2 - p e S 9 1 - t c O 0 2 - t c O 9 1 - v o N 0 2 - v o N 9 1 - c e D 0 2 - c e D TBILISI AIRBNB MARKET: USD ADR AND OCCUPANCY (%) Listing nights booked Market revenue 200% 150% 100% 50% 0% -50% -100% 8 1 - b e F 8 1 - r a M 8 1 - r p A 8 1 - y a M 8 1 - n u J 8 1 - l u J 8 1 - g u A 8 1 - p e S 8 1 - t c O 8 1 - v o N 8 1 - c e D 9 1 - n a J 9 1 - b e F 9 1 - r a M 9 1 - r p A 9 1 - y a M 9 1 - n u J 9 1 - l u J 9 1 - g u A 9 1 - p e S 9 1 - t c O 9 1 - v o N 9 1 - c e D
 0 2 - n a J 0 2 - b e F 0 2 - r a M 0 2 - r p A 0 2 - y a M 0 2 - n u J 0 2 - l u J 0 2 - g u A 0 2 - p e S 0 2 - t c O 0 2 - v o N 0 2 - c e D Source: Airdna 5000% 0% -5000% -10000% -15000% -20000% • With acceleration of the virus spread throughout Georgia, number of nights booked, properties booked and active listings are down by -87%, -80% and -50% YoY on Tbilisi Airbnb market in December 2020, respectively • The proportion of booked properties has significantly worsened amid the pandemic, down to 19% in December 2020 from 49% in the same month of the previous year • Total revenue generating from Tbilisi Airbnb market decreased by 69% YoY to USD 11.7mln in 2020 ANNEX: NUMBER OF RESIDENTIAL PROPERTY SALES TRANSACTIONS 18 GEORGIA BATUMI* KUTAISI 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 300 250 200 150 100 50 0 1,400 1,200 1,000 800 600 400 200 0 6 1 - r a M 6 1 - n u J 6 1 - p e S 6 1 - c e D 7 1 - r a M 7 1 - n u J 7 1 - p e S 7 1 - c e D 8 1 - r a M 8 1 - n u J 8 1 - p e S 8 1 - c e D 9 1 - r a M 9 1 - n u J 9 1 - p e S 9 1 - c e D 0 2 - r a M 0 2 - n u J 0 2 - p e S 0 2 - c e D 6 1 - r a M 6 1 - n u J 6 1 - p e S 6 1 - c e D 7 1 - r a M 7 1 - n u J 7 1 - p e S 7 1 - c e D 8 1 - r a M 8 1 - n u J 8 1 - p e S 8 1 - c e D 9 1 - r a M 9 1 - n u J 9 1 - p e S 9 1 - c e D 0 2 - r a M 0 2 - n u J 0 2 - p e S 0 2 - c e D RUSTAVI BORJOMI 200 150 100 50 0 6 1 - r a M 6 1 - n u J 6 1 - p e S 6 1 - c e D 7 1 - r a M 7 1 - n u J 7 1 - p e S 7 1 - c e D 8 1 - r a M 8 1 - n u J 8 1 - p e S 8 1 - c e D 9 1 - r a M 9 1 - n u J 9 1 - p e S 9 1 - c e D 0 2 - r a M 0 2 - n u J 0 2 - p e S 0 2 - c e D GORI 250 200 150 100 50 0 120 100 80 60 40 20 0 6 1 - r a M 6 1 - n u J 6 1 - p e S 6 1 - c e D 7 1 - r a M 7 1 - n u J 7 1 - p e S 7 1 - c e D 8 1 - r a M 8 1 - n u J 8 1 - p e S 8 1 - c e D 9 1 - r a M 9 1 - n u J 9 1 - p e S 9 1 - c e D 0 2 - r a M 0 2 - n u J 0 2 - p e S 0 2 - c e D 6 1 - r a M 6 1 - n u J 6 1 - p e S 6 1 - c e D 7 1 - r a M 7 1 - n u J 7 1 - p e S 7 1 - c e
 D 8 1 - r a M 8 1 - n u J 8 1 - p e S 8 1 - c e D 9 1 - r a M 9 1 - n u J 9 1 - p e S 9 1 - c e D 0 2 - r a M 0 2 - n u J 0 2 - p e S 0 2 - c e D Source: NAPR, TBC Capital; *Adjusted for developer sales not previously reflected in the database LEGAL NOTICE This publication (the “Publication”) has been produced and distributed by the “TBC Capital” LLC (the “TBC Capital”).
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Mary Chachanidze, CFA Managing Director Aleqsandre Bluashvili Head of Research Tamar Zakaidze Senior Research Associate Andro Tvaliashvili Research Associate Luka Chigilashvili Research Associate Vladimer Choghoshvili Intern Otar Nadaraia Chief Economist, TBC Group Ana Mjavanadze Acting Head of Macro-Financial Analysis Department Juli Avlokhashvili Intern Tel: +995 32 2 272727 Email: research@tbccapital.ge Web-page: www.tbccapital.ge; www.tbcresearch.ge