Sports Sector | Georgia | 2019 PREPARED FOR: Batumi International Stadium CONTENTS Executive Summary 3 Sport Tourism, Global Trends 67 Country Profile 4 Conclusions 71 Photo: The Biltmore Hotel Tbilisi International Rankings 6 Appendix 1 - Real Estate Registration 72 and Construction Permits Economic Overview 7 Appendix 2 - Primary Information Sources, Tourism Overview 14 data used for the study and definitions 76 Football 26 Disclaimer 78 Rugby 34 Project Team 79 Basketball 38 Colliers Global Stats at a Glance 80 Tennis 41 Weightlifting 46 Skiing 50 Judo 55 Handball 58 Other Sports 61 Upcoming Infrastructure 66 Colliers International Georgia 2 EXECUTIVE SUMMARY Sports tourism is set to become one of the world’s The Georgian basketball team is also successful, biggest industries according to numerous ranking among the top teams in Europe and projections and studies conducted by entities like constantly making it to the playoffs of the the World Tourism Organization (WTO) and the EuroBasket. Tbilisi is among the four cities set to International Olympic Committee (IOC). host the prestigious EuroBasket in 2021. The Georgian team will be playing, having auto qualified Sports tourism is the act of travelling from one for it due to their performance in the previous location to another with the purpose of being in championship. Notably, the Basketball Federation some way involved in a sporting activity or event. does not own any stadium and spends a considerable amount on rent every year. The Georgia’s Sport Sector is a vibrant sector with Georgian basketball team takes part in annual infrastructural projects underway in almost all major international events. sport categories. There are numerous sports where Georgia is considerably successful among the The Georgian Football Federation has by far the world’s elite: with rugby, football, and basketball the most developed infrastructure in the country, with three major sports with the highest number of fans. four major stadiums under active construction, and more already in use. The Georgian rugby team can boast being among the best in the world, and this is proven in the There are minor but still developed sports that World Rugby ratings, where Georgia ranked 12th as Georgia and Georgians take part in around the of 2019 and has been in the top 15 for the past 4-5 world extremely successfully. Chess is a good years. example where Georgian women are some of the best in the world. Georgian rugby teams and clubs have a total of 11 training bases and stadiums, with the biggest of A Georgian ice-skating couple also made history them being the Shevardeni training base. Most of when they won gold in the Junior Grand Prix in Italy. the high-profile games of the national teams are Futsal and swimming teams are also successful played at the Mikheil Meskhi Stadium, which is among other national teams. owned by the Georgian Football Federation and is considerably larger in terms of capacity. Georgia There are some sports that Georgia can naturally also held the U20 World Rugby Championship, one support due to location and geography. Good of a major events in the world. Each year Georgia is examples would be rafting, mountain climbing and visited by approximately 10 international several other extreme sports. delegations for reasons ranging from practice games or for team retreats. These delegations are mainly made up of between 20 and 40 people ranging from teams' physicians to players. Delegations stay in Georgia ranges from 2-3 days to 2 weeks. Photo: Switzerland, Zermati Colliers International Georgia 3 COUNTRY PROFILE Background At the crossroads of Europe and Asia, Georgia POPULATION AREA borders Turkey, Armenia, Azerbaijan, and Russia. The country occupies an area of 69,700 square kilometers (sq km) and is home to a population of 3.7 million 2 people. The country’s land borders run a length of 3.7mln 69.7K km 1,839 kilometers (km), while the Black sea coastline is 315 km. CAPITAL CITY OF GEORGIA TBILISI During last two decades, Georgia has implemented OFFICIAL LANGUAGE GEORGIAN large-scale reforms that have led to political and economic transformation. It has strengthened its CURRENCY GEORGIAN LARI (GEL) democracy and furthered its relationship with the GDP PER CAPITA, 2019* USD 4,763 European Union (EU). The Association Agreement with EU was signed and ratified in 2014. Georgia has REAL GDP GROWTH RATE, 2019 5.1% also made business development within the country a UNEMPLOYMENT RATE, 2019 11.6% top priority through encouraging entrepreneurship, attracting private investments, and shifting tax AVERAGE MONTHLY SALARY, 2019* USD 567.9 incentives, thereby positioning itself as an attractive LIFE EXPECTANCY, 2018 74 years option to the international business world. Source: Geostat (preliminary data) With its unique cultural heritage and exuberant hospitality, Georgia’s tourism industry continues to grow and thrive, further bolstering economic growth. Government Georgia is a parliamentary republic. Parliamentary elections are held every four years. In 2018, Georgia’s parliament relocated to Tbilisi from Kutaisi. It acts as the representative body for the country, exercising legislative power and developing domestic and foreign policy. As an executive council of government ministers, Georgia’s cabinet is headed by Giorgi Gakharia, a member of the majority ‘Georgian Dream Party.’ Based on accountability, citizen participation, technology, and innovation as its guiding values, today’s government continues to make European and Euro-Atlantic integration a primary strategic objective. Colliers International Georgia 4 Legal Framework Tax Climate The Georgian Constitution, adopted in 1995, lays out To stimulate investments and boost economic the structure of the national government and defines growth, developing an attractive tax system is one of its authority and function. Georgia’s court system has the main goals of the Georgian government. With three branches: the Courts of First Instance (District or only six flat-rate taxes (Personal Income Tax – 20%, City Courts), the Appellate Courts, and the Supreme VAT – 18%, Profit Tax – 15%, Import Tax – 0%, 5%, or Court. The Courts of First Instance have jurisdiction 12%, Excise Tax – on a few selected goods, and over all civil, criminal, and administrative cases. Property Tax – up to 1%) and the Estonian tax model Decisions from the Courts of First Instance may be implemented in 2017 that exempts undistributed appealed at the Appellate Courts and further earnings from profit tax, has made Georgia one of appealed at the Supreme Court. the most competitive places to invest in. Georgia’s liberal trade regimes include: “Double Taxation As an alternative to litigation, Georgian laws allow Avoidance” 56 countries and the DCFTA with the EU arbitration both in local as well as international (since 2014). arbitration institutions. Georgia is a member of the International Centre for Settlement of Investment In January 2019, a new pension fund system was Disputes (ICSID). The Public Service Hall in Georgia launched in Georgia that is compulsory for every provides customers with state services, including hired person under the age of 40. For self-employed business registration and property registration people and those above the age of 40, engagement through the ‘one-stop-shop’ principle that ensures in the system is optional. The methodology of the efficient service delivery. reform is a 2+2+2 scheme, meaning that employer, employee, and government transfer 2% of the gross volume of the employee’s income on a personal account. Colliers International Georgia 5 International Rankings Georgia has improved its status as a free economy EASE OF DOING BUSINESS thanks to its fiscal policy, regulatory efficiency, and open market policies. According to the World Bank’s Doing Business report 2020, Georgia ranks 7th for “ease of doing business” among 190 economies, 2nd for “ease of starting a business”, and 5th for “ease of registering property”. In 2019, Fitch Ratings upgraded Georgia's Long-Term Foreign-Currency Issuer Default Rating from 'BB-' to 'BB' with a stable outlook. As Fitch explains, it was due to the country maintaining a resilient economy during the regional shocks in 2018 and adds that Georgia ranks above the current medians of 'BB' category peers. Standard & Poor’s also raised Georgia’s ranking from ‘BB-’ to ‘BB’, while Moody’s credit rating for Georgia remains at ‘Ba2’. Registering a new business takes a maximum of two Source: World Bank, Colliers International days and requires no minimum capital requirements. GLOBAL COMPETITIVENESS INDEX According to the ‘Heritage Foundation Index of Economic Freedom 2020,’ Georgia’s economy is categorized as Mostly Free, ranking 12th across 180 countries. Georgia remains the least corrupt country in the region. According to Transparency International, Georgia is the top performer among the Eastern European and Central Asian countries. Foreign investors in Georgia are guaranteed equal rights to those of Georgian citizens. After payment of taxes, foreign investors are entitled to repatriate the Source: World Bank, Colliers International earnings (income) gained from investments and other funds abroad. Property Ownership & Non-agricultural Lands In Georgia, property rights are recognized and protected by the Law. An owner has the right to possess, use and dispose of his or her property. The rights of individual owners to possess, use and dispose of land are regulated by the land legislation. There is no restriction on non-agricultural land ownership in Georgia. According to the Heritage Foundation Index, Georgia has substantial improvement in property rights in 2020 and is 21% above the world average. THE WORLD CORRUPTION RANKING Georgia 44 Belarus Romania 66 Bulgaria Armenia 70 74 77 Turkey 91 Moldova Ukraine Azerbaijan 120 126 126 Source: World Bank, Colliers International Colliers International Georgia 6 ECONOMIC OVERVIEW Gross Domestic Product In 2019, according to the preliminary data of Geostat, GDP AT CONSTANT PRICES BY YEARS (GEL, BLN) the gross domestic product of Georgia reached an all-time high of GEL 40.4 billion.