History of Tbilisi
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Sectoral Research of Investment Potential of Tbilisi Disclaimer Induction Third pary disclosure • The information presented in this • This report is provided in an document (hereinafter – the “Report”) has environment that may rapidly change. been developed by Deloitte (hereinafter – Furthermore, such an environment may the “Consultant”) within the project of sometimes require us to provide advice “Sectoral research of investment potential in situations where there is ambiguous of Tbilisi” for Tbilisi City Hall, Municipal and/or unclear direction from business Department of Economic Development perspective. In these situations, our (hereinafter – the “Client”). conclusions are based upon our current • The purpose of this report is to provide understanding of the market and due high-level information to assist in professional judgment. obtaining an overview of development of • The Report is neither a professional pre-selected sectors in Tbilisi’s economic. advice, nor should be used as a basis for The following list of sectors was provided any decision or action that may affect by Client to be researched: Hospitality, the Third Party or its business. Deloitte Retail & Entertainment, Pharmaceuticals, accepts no responsibility or liability for Healthcare, Creative (including any reliance placed on the contents of the Advertisement, Film Industry, and Fashion Report. Any reliance placed on the Report Design). Countries for review were limited is at the sole and exclusive risk of the by five: two in Eastern Europe, two in CIS Third Party. and Turkey • The presentation is not intended to serve as a basis for any investment decisions and may not be considered a recommendation for investment by the Consultant. • The findings presented in this report are based on the information provided to the Consultant by Client and obtained from publicly available sources. • Taking an investment decision, investors must rely on their own expertise and take into account the risks common to the investments in Georgia. 2 Sectoral Research of Investment Potential of Tbilisi 01 Executive Summary 004 02 Investment Environment Overview 006 03 Analysis of Selected Sectors in Tbilisi 024 04 Selected Country Analysis 044 05 Selected City Analysis 084 06 Recommendations 098 07 Annexes 102 3 Sectoral Research of Investment Potential of Tbilisi Executive Summary As the largest city, cultural and economic center of the country, Tbilisi plays a major role in the overall development of Georgia. Tbilisi is responsible for 42% and other comprehensive document, that focusing on key tourism demographics. 31% of national GDP and population would prioritize and structure the Further growth could be achieved by respectively and is a key business hub city’s development in a predictable diversification of offerings in niches, such in Georgia. Our research encompasses manner; as spa & wellness, medical, active, family, the analysis of the five pre-selected by • Further infrastructural improvements, MICE and gastronomical tourism. the City Hall sectors being strategically including the street profiles to allow paramount for Tbilisi and potentially pedestrian and cycle traffic priority Healthcare. The sector is currently in attractive for investors considering and effective automotive traffic and active development and the long-term the growth opportunities, including parking management success is hinged on achieving regional hospitality, retail & entertainment, • Enhanced integration of educational competitiveness. Presently there are healthcare, pharmaceutical and vocational training programs strong opportunities to assist the manufacturing and creative industry. with subsequent skill refinement sector in promoting medical tourism The research is based on the relevant through working experience. for services such as orthodontistry, statistical data, various industry invitro-fertilization and others. A unified reports and forecasts, benchmarking of The following sectoral observations approach to medical tourism can support comparable cities and best practices for and potential development areas were in leveraging or developing hospitality the sectoral development and interviews identified for the below sectors: and travel services. By introducing a with industry experts and provides for package approach, including airfare, the recommendations and identified Hospitality. The sector is mature in its key accommodation and rehabilitation, opportunities. offerings and has started to suffer from Tbilisi could compete on the lower cost over saturation in the historical part of medical services. Several essential development areas town. It is essential to promote actions are critical for boosting and supporting that will draw tourists to other parts Retail & Entertainment. While retail is growth for all sectors and include the of the City and focus on the increased actively developing on its own, subject to following: amount of tourist spending rather than market size and infrastructure concerns, • Cohesive long-term guidance from number of visitors. Higher marginality the entertainment sector shows the City, either a city strategy or of the offerings can be achieved by significant growth opportunities. 4 Sectoral Research of Investment Potential of Tbilisi By targeting the tourism flows for various Pharmaceuticals. The pharmaceutical are strong assets for nurturing expat entertainment activities, rather than market exists but is limited in capacity communities. With the appropriate focusing purely on the local population, by the market size and legislative implementation of infrastructure and the sector can see significant growth and environment. The research did not development of safe and attractive contribute to attraction of more visitors identify significant opportunities for full urban environment, the city can to non-central parts of Tbilisi. cycle drug manufacturing, although the become the go to location for young City has the history and reputation to professionals from other regions that will Creative. The industry analysis covered foster growth in the specialized niche in turn shape the skills and wellbeing of marketing and advertising industry areas. The bacteriophage identification the residents. excluding outdoor and printed media, and cultivation championed by Eliava film making, creative arts, and fashion institute could be a promising growth design and sewing. The sector has target given the right combination of significant potential for growth, although internal and external factors. needs the greatest integration with the educational sector, as many of the skills In addition to the selected sectors the can only be matured through experience. City could be attractive for settling Engaging creative professionals in the the companies in IT development and city to advance urban planning, urban business process outsourcing and the design and cultural tourism offerings can sectors have recently seen the significant have a dynamic and profound synergy growth. The low cost of living, excellent effect on the city’s culture and its surroundings, convenient location, ease attractiveness to the outside world. of doing business and low entry barriers 5 Sectoral Research of Investment Potential of Tbilisi Investment Environment Overview 6 Sectoral Research of Investment Potential of Tbilisi 7 Sectoral Research of Investment Potential of Tbilisi Russia Quick Facts on Georgia th fastest growing 4 tourist destination in the world UNESCO world heritage 3 sites Oldest wine producing nation >8,000 years unique climate Zugdidi 12 zones Poti E60 international The Black Sea 3 airports E692 Ozurgeti sea 2 ports E70 Batumi 15.1 USD bln GDP 2017 Sarpi BCP Remote electronic registration Batumi of a business International Airport Duty Free access to 2.3 bln customers Source: Geostat, Invest in Georgia 2017 8 Sectoral Research of Investment Potential of Tbilisi Population 3,729,600 Cities National Park <10k ~50k Queen Tamar Airport ~150k Mestia Tbilisi 1,159k Kazbek 5,033 m Single carriageway Dariali BCP Dual carriageway David the Builder Kutaisi International One way dual carriageway Airport Zugdidi Ambrolauri Shota Rustaveli E117 Tbilisi International Kutaisi Airport E60 Gori E60 Telavi М8 Mtskheta E60 Tsodna Tbilisi BCP Akhaltsikhe М6 М5 Vale BCP E691 Rustavi М7 E117 E60 М13 Ninotsminda Kartsakhi BCP Red Bridge E691 BCP Guguti Sadakhlo Baku BCP BCP Ninotsminda BCP Kars Turkey Armenia Azerbaijan 9 Sectoral Research of Investment Potential of Tbilisi History V century AD 1122 of Tbilisi Tbilisi is the capital of the Republic of Georgia and the country’s largest city. After Baku, Azerbaijan, it is the second–largest city by population in the Caucasus region, which also encompasses Start of the medieval golden the neighbouring countries of age of Tbilisi under the King David the Builder following Armenia and Azerbaijan. Tbilisi the Battle of Didgori is strategically located at the crossroads of Europe and Asia, making it a natural focal point Tbilisi is founded by Vakhtang I Gorgasali for critical investment projects in the King of Kartli infrastructure, energy and trade. 10 Sectoral Research of Investment Potential of Tbilisi First train completes the journey from Poti to Tbilisi on Trans-Caucasian Line Opening of Tbilisi Magnetic Tbilisi Metro carries and Meteorological its first passengers Observatory First lecture at the Tbilisi State University Parliament of Georgia ratifies the association agreement with the EU 1818 1870 1884 1927 2010 1861 1872 1918 1966 2016 First direct mayoral