Tbilisi has rapidly emerged as one of the most attractive real estate markets in Eastern Europe, especially for investors seeking high returns through short-term rentals. With a combination of low property prices, growing tourism, and favorable legislation, Georgia’s capital offers strong rental yields that often surpass those in more saturated European cities.
Market Overview
As of 2025, the average gross rental yield in Tbilisi ranges between 6% and 12%, depending on location, property quality, and rental strategy. Short-term rentals—especially those listed on platforms like Airbnb or Booking.com—can significantly outperform long-term rental strategies, with many hosts reporting annual occupancy rates of over 60% and average daily rates (ADR) between $40 and $55.
Data from platforms such as AirDNA and Airbtics shows that a well-located, professionally managed one-bedroom apartment in the central districts of Tbilisi can generate $8,000 to $10,000 in gross annual revenue. This translates to gross yields in the range of 10% to 14%, and net yields of 7% to 10% after expenses.
Choosing the Right Location
Selecting the right neighborhood is critical. While upscale districts like Vake and Mtatsminda offer strong tourist demand and high nightly rates, more residential areas such as Didi Digomi and Gldani can deliver better purchase price-to-rent ratios. Investors should assess the trade-off between property acquisition cost and expected revenue.
Old Tbilisi, Sololaki, and Vera remain top choices for short-term rental investors due to their architectural charm, proximity to landmarks, and walkability. These areas typically maintain high occupancy rates year-round, especially during the spring and summer tourist seasons.
Operational Strategy and Property Management
Maximizing ROI in the short-term rental market requires more than location. Investors should focus on creating a guest-friendly, aesthetically pleasing space with reliable amenities such as high-speed internet, air conditioning, and quality furnishings. Well-designed interiors with a modern yet local touch can lead to better guest reviews, repeat bookings, and higher nightly rates.
Partnering with a local short-term rental management company can be especially advantageous for foreign investors. These firms handle day-to-day operations, guest communication, check-ins, cleaning, and dynamic pricing. While management fees typically range from 15% to 25% of gross income, the resulting increase in occupancy and guest satisfaction often justifies the cost.
Pricing and Seasonality
Understanding the local booking calendar is essential. High tourist seasons—late spring through early autumn—present opportunities to charge premium nightly rates. Investors should utilize pricing tools that adjust rates based on demand, competitor listings, events, and booking windows. Mid-week discounts, last-minute deals, and multi-night promotions can help boost occupancy during slower months.
Cost and Revenue Projections
Short-term rentals involve operational costs not present in traditional leases. These include cleaning fees, utility bills, consumables, platform commissions, and property maintenance. On average, these expenses consume 20% to 30% of gross income. Net yield calculations should account for these variables to provide a realistic picture of return on investment.
For example, a centrally located apartment purchased for $75,000 and rented short-term with a 65% annual occupancy rate at an ADR of $45 could generate approximately $10,600 in gross revenue. After operating expenses (~$2,800), the net return would be around $7,800—resulting in a net yield of just over 10%.
Legal and Tax Considerations
Georgia maintains one of the most open real estate markets in the region. Foreign nationals are allowed to purchase and rent out residential property with no restrictions, except for agricultural land. Short-term rental income is taxed under the general individual income or corporate tax regime, depending on how the activity is registered.
It is advisable to register as an individual entrepreneur (IE) to benefit from Georgia’s small business tax regime. If annual revenue is under 500,000 GEL, the tax rate can be as low as 1%. Investors exceeding this threshold or operating multiple properties may also consider forming a legal entity such as an LLC.
Conclusion
Tbilisi offers a compelling opportunity for real estate investors focused on the short-term rental segment. With proper planning, location selection, and operational management, returns can exceed those in more mature European markets. As the city continues to grow in popularity among tourists, remote workers, and digital nomads, demand for high-quality short-term rentals is expected to remain strong. Investors who act now stand to benefit from both strong cash flow and long-term capital appreciation.
