Investment Projects

Important Figures

Population 1.113 mln.

Density 2 322.8/sq.km

Area 503 sq.km

Coordinates 41°43’0”N 44°47’0”E

Average Temperature 12,7°C

Average monthly temperature January 1°C; July 24.4°C

GDP >3,200 US $

CPI 160,91

Registered business entities 270,601

Annual FDI >1,5 billion USD

Unemployment Tbilisi 21,4%

Real estate prices (1 sq.m) 400-1100 $

City Profile

Gdlani

177 500

Total Population: 1 113 000 (2017)

Samgori

178 000

Krtsanisi

40 000

Mtatsminda

50 000

Vake

112 000

Saburtalo

139 000

Didube

70 500

Chugureti

65 500

Isani

126 000

Nadzaladevi

154 500

Source: Geostat

Approx. Distribution according to General census 2014

Demography

TBILISI Role in Georgian Economy

Source: Geostat, 2015

141,50 152,83 150,73 150,25155,19

160,91

107,1 108,599,1

99,5 103,1 104

0

20

40

60

80

100

120

140

160

180

2010 2011 2012 2013 2014 2015

CPI - Tbilisi

Tbilisi Georgia

3 523,4

3 599,6

3 676,2

3 743,1

3 400

3 450

3 500

3 550

3 600

3 650

3 700

3 750

3 800

2012 2013 2014 2015

GDP per capita - Georgia

GDP - Georgia

USD

GDP 2015 – 13,988.1 mln USD

GDP 2016 (I, II, III Quarter) – 10,439.7 mln USD Annual economic growth - 2.3%

Tbilisi Share in GDP 41.7%

City Economy

City Economy

Source: Tbilisi in Figures 2015Geostat.ge

Commercial Banks -19

Foreign Controlled - 18

In the Premium Listing of

London Stock Exchange – 2

Banks

Micro Finance Institutions –

69

Non-bank depository

institutions – 15

Stock Exchanges – 1

Insurance companies – 14

Pension Funds – 5

International Financial

Institutions: EBRD, kfw, IFC,

ADB, FMO, etc

Source: Ministry of FinanceNational Bank of GeorgiaGeostat.ge

Removing Excessive Administrative Burden from investors

Significant reduction of bureaucracy

Overall, 70% of business-related licenses and 90% of business permits were abolished

One-stop shops

Taxation was simplified with the total number of taxes reduced from 21 to 6

Most of the import tariffs and fees were abolished

Perform without Barriers

Permit only for:

Construction

Conversion of passengers by public transport (except taxi)

Outdoor advertising by using municipal property

Start Business in 1 Day

No Min. Capital Requirement

Register Property in 1 Day

G e o r g i a Ta x S y s t e m

VAT 18%

• Corporate profit tax rate – 0 %, if the company is reinvesting

• No payroll tax or social insurance Tax

• No capital gains tax

• No wealth tax and inheritance tax

• Personal income tax for interest, dividend, royalty – 5%

• Foreign-source income of individuals fully exempted

• Accelerated depreciation on capital assets

• Loss carry forward for corporate profit tax purposes (10 years)

• No restrictions on currency convertibility or repatriation of capital &

profit

• Double taxation avoidance treaties with 47 countries

Corporate Profit Tax 15%

Personal Income Tax 20%

Dividend and Interest Taxes 5% / 5%

Property Tax Up to 1%

Import Duties0%, 5%,

12%

City Economy

City Economy

Tbilisi City Hall services

Online Auctions for

Municipal Property

Purchase

Procurement

/Tenders

Interactive Map

Permit for

construction

City Economy

Employment

Source: Geostat, 2015

88%

12%

Employment in Georgia

Employed

Unemployed

Thousands

79%

21%

Employment in Tbilisi

Employed

Unemployed

Thousands

15.4% of employed people in Georgia are in Public Sector.

57.2% of employed people in Georgia are self-employed.

16.6% of employed people in Tbilisi are self-employed.

Average salary of employed people is 386.92 USD in Georgia

Distribution of Economic Entities

Other Cities of Georgia57%

Gldani2%

Didube5%

Vake4%

Isani4%

krtsanisi0%

Mtatsminda5%

Nadzaladevi6%

Saburtalo8%

Samgori5%

Chugureti3%

Tbilisi43%

Registered Economic Entities Georgia – 651 392Tbilisi – 283 515

43% of Georgian companies are established in Tbilisi

Source: Geostat, 2016

City Economy

Foreign Direct Investments

Source: Geostat, 2015

911 564,26941 902,62

1 758 422,93

1 564 499,77

693 433,80

688 367,67

1 326 936,61

1 234 656,99

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1 600 000

1 800 000

2012 2013 2014 2015

FDI

FDI Growth - Georgia FDI Growth - Tbilisi79%

13%

1% 7%

FDI 2015

Tbilisi

Adjara

Kakheti

Other

0100000200000300000400000500000600000

FDI according countries 2015

FDI according countries 2015

Thousands, USD

Thousands, USD7%

9%

8%

37%

9%

30%

FDI by sectors, 2015

Construction

Hotels andRestaurants

Energy

Transportandcommunications

FDI 2016 (Q1,Q22,Q3) – 1,298.4 mln USD

City Economy

Production and Turnover of City-based enterprises

Source: Geostat, 2015

Mln, USD Mln, USD

82%

9% 9%

Percentage of Production distribution between

enterprises

Large

Medium 86%

7% 7%

Percentage of turnover distribution between

enterprises

Large

Medium

2010 2011 2012 2013 2014 2015

Large $18 490 $26 585 $34 206 $33 019 $35 805 $37 421

Medium $2 580 $3 701 $2 773 $3 760 $4 051 $4 206

Small $1 528 $2 784 $3 695 $3 490 $3 939 $4 260

500

5500

10500

15500

20500

25500

30500

35500

40500

Production

2010 2011 2012 2013 2014 2015

Large $40 194 $58 531 $70 889 $71 160 $80 537 $84 899

Medium $4 066 $6 708 $4 891 $6 872 $6 819 $7 136

Small $2 144 $5 192 $5 660 $5 059 $6 235 $7 001

500105002050030500405005050060500705008050090500

Turnover

City Economy

Total Turnover 2015 - 14,650.19 million USDTotal Production 2015 - 6,787.92 million USD

Tbilisi- Easy Connectivity

Location at the crossroads of Europe and Asia

Strategic location in the Region

Direct flights to 30 countries

Key Railway Line

Links with China and India through 1 corridor

Links with EU through 4 corridors

Free Trade with CIS

DCFTA – Association Agreement with EU

GSP with USA, Canada, Switzerland, Japan and Norway

Company Direction Frequency (weekly)

Georgian Airways Tbilisi-Amsterdam 2

Tbilisi-Vienna 2

Tbilisi-Tel Aviv 7

Tbilisi-Moscow 14(18)

Tbilisi-Batumi 2(7)

Tbilisi-Kutaisi 1

Tbilisi-Odessa 2

Tbilisi-Yerevan 7

Tbilisi-Erbil 1

Tbilisi-St. Petersburg 2

Tbilisi-Bagdad 1

China Southern Airlines Tbilisi-Urumqi 2

Skat Tbilisi-Aktau 3

Air Astana Tbilisi-Almaty 5

Azerbaijan Airlines Tbilisi-Baku 7

Qatar Airways Tbilisi-Doha 7

Fly Bagdadi Tbilisi-Bagdad 1

Fly Dubai Tbilisi-Dubai 7

Ural Airlines Tbilisi-St. Petersburg 1

LOT Tbilisi-Warsaw 3

Ukraine Intern. Airlines Tbilisi-Kiev 11

Belavia Tbilisi-Minsk 7

Lufthanza Tbilisi-Munich 7

Aeroflot Tbilisi-Moscow 7

S7 Airlines Tbilisi-Moscow 7

Aegian Airlines Tbilisi-Athens 1

Air Baltik Tbilisi-Riga 2

Turkish Airlines Tbilisi-Istanbul 28

Atlasjet Airlines Tbilisi-Istanbul 7

Pegasus Airlines Tbilisi-Istanbul 7

Air Cairo Tbilisi-Sharm El-Sheikh 1

Air Arabia Tbilisi-Sharjah 4

Izrail Tbilisi-Tel Aviv 4

Elinair Tbilisi-Thessaloniki 1

Yanair Tbilisi-Kiev 1

Connectivity

Real estate market

amount Demand Average selling price

average Rentingprice

Retail Total space- 952,983 m2 Shopping Center – 83%;City Center– 93%

Low – 200$Average – 2500$Premium – 6500$

Shopping Centers – 16$; City Center– 36$

Office Rented office space- 436,630 m2

A class - 92%A- class - 91% B class - 82% B class - 84%

Unspecified A class -USD 23.7/m2

A- - USD 15.8/m2

B+ - USD 14/m2

B - USD 6.9/m2

Living space About 360,000 Housing units transactions- 18,286 Low – 580$Average – 942$

Premium – 1497$

In the middle class:1 room. – 235$2 room. – 365$3 room. – 410$

Total Number of international visitors – 6 350 825

EUROPE

5 968 151

AFRICA

6 631

AMERICA

42 906

EAST ASIA/PACIFIC

238 543

MIDDLE EAST

88 235

OTHER

6 359

Source: Georgian National Tourism Administration

Tourism

4 428

5 392 5 493

5 9016 351

4 000

4 500

5 000

5 500

6 000

6 500

2012 2013 2014 2015 2016

Number of international visitors by years

Number of international visitors by years

Thousands,

Number of international visitors

in Georgia has increased by

7.6% in 2016

Top 15 Countries by arrivals

Azerbaijan

Armenia

Turkey

Russia

Ukraine

Iran

Israel

Kazakhstan

Poland

Germany

Belarus

India

U S A

Saudi Arabia

Greece

Source: Georgian National Tourism Administration

0

500 000

1 000 000

1 500 000

2 000 000

2012 2013 2014 2015 2016 (3Qr)

1 410 902

1 719 7001 787 1401 935 915

1 684 861

International Tourism Receipts Thousands, USD

Tourism

Colliers International

Colliers International

Gambling sector customers mainly come from Russia, Azerbaijan, Turkey and the Middle East

Slots - 50,000 - 1,000,000 GEL

Casino: 0 - 250,000 - 5,000,000 GEL

The Gambling club: 10,000 - 50,000 GEL

Levy for the gambling business

$28,6 $43,3 $140,9

$383,1 $466,7

$781,8 $863,9

$(200,0)

$-

$200,0

$400,0

$600,0

$800,0

$1 000,0

2009 2010 2011 2012 2013 2014 2015

TURNOVER MILLION USD (2009-2015)

Tbilisi Batumi The Rest

Shangri La Casino Iveria (batumi Casino Rooms (Kazbek)

Casino Adjara Sheraton BatumiCasino Ambassador

(Kachreti)

Casino Iveria Casino Intourist Palace

Golden Palace Batumi

Casino Leogrand Batumi

Gambling Business

voltage level Tarrifs

220/380 volts (non-residential users)

0.0759 USD / kWh

Electricity - Telasi

Water: LTD “Georgian Water and Power” - The tariff for the supply of drinking water and passing -wastewater treatment for government agencies and the commercial sector is 1.69 USD per 1m3

Cleaning Services - LTD"Tbilservis Group" (care, decontamination) - up to 0.37 USD per 1 sq / m

Natural gas - LTD "KazTransGas" - 0.29 USD per 1m3

Corporate Rates for Utilities

Investment Projects

Gudiashvili Square Development Project

Development Project of parking places in Tbilisi

Varketili residential complex project

Development Project of Tbilisi Sea Surroundings

Plot of Land in Temqa District (privatization)

Medical institutions (privatization)

Gudiashvili Square Development Project

Gudiashvili Area is located in the center of the old

Tbilisi, which combines elements of Georgian,

Eastern and classic architecture, giving the

attractiveness and value for tourists.

The project involves the development of hotels

and restaurants complexes of medium size.

Total area – 9.974 sq.m.

58 hotel rooms, 8 rooms with shared bathroom and 24

apartments

Approximate cost of the project – 14 million USD

Payback of the project- 5 years

IRR- 20%

Grant Thornton analysis

Overview of the hotel market in Tbilisi

Georgia has more than 6 million foreign visitors each year;

Most of them stay in hotels / hostels or rent apartments;

Tbilisi hotel market capacity is approximately 7,072 rooms,

equipped with more than 14,837 beds;

Occupancy rate in international hotels is quite high, about

75%, while the average level of occupancy in the local high-

end hotels is about 58%;

The daily cost of hotel room varies from 80-207 USD;

Development Project of parking places in Tbilisi

The purpose of the project - the

construction and development of new

parking spaces to improve traffic in the

city.

Tbilisi City Hall is working on long-term

strategy for parking in the city. At this

stage it is planned to construct 10 multi-

storey parking buildings using new

technologies

The total number of local parking places -

3,500

Approximate cost of the project - 19 million

USD

Payback of the project 4-8 years (depending

on the location)

IRR- 16-51%

Source: PwC feasibility study

Currently in the city - 33.000 parking spaces, which are crowded during

working hours;

Given an annual average growth rate of vehicles, about 8.3%, the demand for

parking spaces is increasing rapidly;

Projected occupancy in multi-storey parking buildings during working hours

is 65-85%;

The demand for parking spaces in Tbilisi

Location map of the parking lots

Varketili residential complex project renovation

General overview

Project involves the transferof ownership to the investorof a nearly 70 ha landinstead of construction of anew residential complex,where the inhabitants will bemoved to.

Samgori District, III array of Varketili, near

Tbilisi Sea

Project Action Plan

The transfer of the land to the investor;

Investor gradually produces the demolition of old buildings and buildsnew

residential complexes;

According to the contract, the investor transfers to the municipality anewly constructed area (for about 5,600 families);

Investor operates at its own discretion the remaining unsettled part ofthe built area;

Project calculations

Space requirements for the settlement of 5,600 families - 250 000 sq.m

Total built-up area in the quarter - 2,000,000 sq.m

The average price of 1 sq.m. in the market - 600 USD

The information will be updated in summer 2017.

Development Project of the Tbilisi Sea

General overview

Tbilisi Sea is an artificial reservoir whichis located eastern part of the city and usedas drinking water

The municipality plans to developsurrounded 1,100 ha territories inaccordance of land usage plan.

Project overview

Tbilisi Sea Development Project includes the creation of large green spaces, sportsand recreation facilities as well as residential and commercial areas.

Conceptual development plan is elaborated. At the moment Municipality is workingon the creation of investment projects.

Tbilisi sea land usage plan is developed for surrounded 1,100 hectares.

Tbilisi Sea and the surrounding areas are on average 530-580 meters from the sealevel.

The reservoir has a length of 8.75 km and a width of 2.85 km the perimeter ofcoastline is 26,3 km.

The average temperature is 13.4 ° Celsius, the hottest month is July (average 25 ° C),the coldest January (2,4 ° Celsius), the average annual rainfall is 507.2 mm.

Tbilisi sea surrounding zoning

Sample/ does not reflect actual plans

I Stage

outdoor food markets CAPEX - 397.06

scenic amphitheater CAPEX - 845.01

mass event area CAPEX - 914.98

outdoor amphitheater /music venue CAPEX - 87.38

educational trail CAPEX - 494.58

family type park CAPEX - 1,045.07

wakepark CAPEX - 363.31

exclusive outlets CAPEX - 18,237.09

camping CAPEX - 647.43

retail villages CAPEX - 4,843.26

Business initiatives that will be implemented in stages

I Stage

luxury ecolodge CAPEX - 4,399.10

spa and wellness resort CAPEX - 4,532.56

3 star hotel CAPEX - 17,327.93

mini theme park CAPEX - 1,426.38

bicycle communication CAPEX - 324.23

water tram CAPEX - 585.46

water sport centre CAPEX - 2,216.56

land sport centre CAPEX - 349.29

kite beach CAPEX - 388.74

equestrian centre CAPEX - 220.25

Business initiatives that will be implemented in stages

II Stage

floating ecolodge CAPEX - 9,891.67

luxury hotels CAPEX - 7,508.23

party boat CAPEX - 4,579.41

wild ecolodge CAPEX - 2,011.69

country club with golfcourse CAPEX - 7,999.93

paintball field CAPEX - 519.9

sports hotel CAPEX - 2,445.91

water tram CAPEX - 585.46

water sport centre CAPEX - 2,216.56

land sport centre CAPEX - 17,829.80

cable car CAPEX - 33,329.44

safari park CAPEX - 787,43

speciality museum CAPEX - 9,992.00

winery vineyard CAPEX - 1,664.77

Business initiatives that will be implemented in stages

III Stage

flyspot CAPEX - 787,02

skiing dome CAPEX - 31,000.00

floating ecolodge CAPEX - 9,891.67

3 star hotel CAPEX - 17,327.93

convention hotel CAPEX - 24,332.35

aparthotel CAPEX - 5,620.89

marina CAPEX - 2,208.41

the entreprenuership incubator CAPEX - 7,994.98

cable car CAPEX - 33,329.44

congressional centre CAPEX - 5,211.20

Business initiatives that will be implemented in stages

Plot of Land in Temka District

Temka district is a part of Gldani regionand is located in the north-eastern part ofTbilisi, near the Tbilisi sea. The mentionedregion is one of the biggest administrativeareas in Tbilisi.

It combines residential buildings of low-income inhabitants, as well as the industrialpopulations. The residential part is mainlycharacterized by tall buildings. The districtis populated very densely.

Project Details

Information about the former radio factory territory:

Since the 90s, the factory no longer works and the territory is therefore abandoned.Large buildings of the factory are located on the cadastral area. Tall residentialbuildings are located near the area, and a rugby stadium is planned to be built as well.Up to 17 buildings with 1 and 2 storey constructions, mainly depreciated, are locatedon both cadestral areas. Two cadastral codes with 93470 and 25285 sq. meter territory.

Total expected price of the territory is:

4,907,692.3 USD (exchange rate 2.6)3,800,000 USD (01.11.17.006.844) 1,107,692.3 USD(01.11.17.006.661)

The privatization of medical institutions

Tbilisi City Hall has planned to privatize municipal-owned nine medicalenterprises. The enterprises are currently managing 11 propertiessituated on different locations.

Maintaining medical profile will be the must on a number of privatizedproperties.

The privatization of medical institutions

Name AddressCadastral

codeRegistered land

area (sq.m)Floor area

(sq.m)

Polyclinic N16 Lilo settlement 01.19.27.001.013 5,153 3,925.60

Family Medicine Center N4 The Vazisubani settlement 01.17.07.045.002 2,858 5,914.07

Blood transfusion station Chugureti District, Uznadze str. 01.16.05.013.021 2,947 2,344.49

Prophylactic Treatment Center N3 Didube, Paichadze str. 01.13.08.006.044 6017 5607

Prophylactic Treatment Center N3 Didube, Z.Chavchavadze str. 01.13.03.024.003 845 2155

Doctor's clinic Tskneti Ttskneti 01.20.01.087.008 1,509 548.5

Kojori Medical clinic Kojori

81.01.05.785 & 81.01.06.342.01.009

17703 444

Kojori Medical clinic Tabakhmela 81.02.08.512 2148 138

Polyclinic for Adults N25 Samgori District 1.19.23.018.011 1,766 1,807.97

Dastakari Village Digomi 01.72.14.022.093 1345 409.53

Cardiology Hospital Chugureti District, Uznadze str. 1.16.05.013.028 1,823 2,110

The location of medical institutions for be privatized

Healthcare and social insurance market 2013 2014 2015 2016*

Market size (millions USD) 671.30 759.80 826.30 634.61

business growth rate (%) 13% 9% 2%

Healthcare and social insurance market overview

* 3 quarter of year 2016

0

500000

1000000

1500000

2000000

2500000

III quarter of year 2016

533.000

More than 2.1 MlnTotal numbers of medical institutions __ 258

Medical institutions in Tbilisi __ 117

Numbers of insured beneficiary

Insured by private companies

Insured by state program

Shartava st 7,0160 Tbilisi,

GeorgiaTel: +995 32 2378 128

E-mail: economic@tbilisi.gov.geWeb-site: www.tbilisi.gov.ge