In global real estate cycles, capital rarely moves loudly at first. It shifts gradually, almost invisibly, away from saturated primary markets and into places that offer something the big cities have mostly stopped offering: room to grow. What we are seeing right now follows that same pattern. Institutional and private money are starting to flow into secondary coastal cities, and Batumi is shaping up as one of the best cities to invest in real estate. A sharper example of why.

This is not a speculative story. Behind it sits real transaction data, sovereign-level economic performance, and the footprints of institutional developers whose track records run into the billions. To understand what is drawing capital here, and why the entry window has not yet closed, the experienced investor has to look past the “emerging market” label and examine what is actually happening on the ground.

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The Saturation Problem in Primary Markets

For most of the past decade, global capital concentrated in gateway cities like London, New York, Dubai, Singapore because those markets rewarded concentration. Purportedly the best cities to invest in real estate, they were liquid, transparent, and scalable. That logic held. The problem is that too much capital chasing the same assets eventually destroys the returns that attracted it in the first place.

Research from CBRE and JLL shows that prime yields across major gateway cities have tightened sharply over the past ten years, with many core residential and mixed-use assets now trading at sub-4% yields. There is not much room left for cap rate compression from those levels, and the margin of safety for new buyers has become thin. Then add the global rate normalization cycle, driven by the Federal Reserve and the European Central Bank, which raised financing costs across the board, forcing a real repricing of leveraged real estate exposure.

The math in many primary markets has turned unfavorable: lower yields, higher entry prices, and limited upside. That combination pushes disciplined allocators toward other options.

Secondary real estate markets don’t outperform primary ones by magic—they outperform them when the pricing spread between the two becomes too wide to justify.

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The Hunt for Real Income

Investors are no longer just underwriting appreciation stories. After the volatility of the past few years, durable income has moved to the front of the priority list. The hard lesson from multiple cycles is that headline property growth can be largely meaningless if the macro variables underneath it are working against you. Currency depreciation, inflation shocks, and tax regime changes can erase nominal gains faster than most underwriting models account for.¹ The IMF has documented this dynamic repeatedly. Currency volatility remains one of the primary drivers of real cross-border investment returns, and not in a way investors enjoy.

That experience has produced a more deliberate allocation approach. Investors today are looking for jurisdictions that deliver both yield and macro coherence. The best cities to invest in real estate, places where the income is real, the rules are stable, and the entry price has not already absorbed five years of optimism.

Secondary coastal cities like Batumi sit squarely in that target zone. The yields are still meaningfully higher than anything you’ll find in Western Europe. The macro framework is, by regional standards, in solid shape. And the asset prices still reflect geography rather than hype.

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Batumi: Mispriced Relative to Where It’s Heading

Batumi’s investment case is not based on promise alone, there are tangible structural factors at work. Situated on the Black Sea and serving as Georgia’s main coastal gateway, the city has been quietly shifting from a seasonal tourism hub into one of the best cities to invest in real estate. It has moved to something closer to a year-round urban economy. The Georgian National Tourism Administration has documented strong post-pandemic recovery in international visitor numbers, with coastal destinations pulling a significant share of that demand.²

The World Bank has noted Georgia’s track record of consistent economic outperformance relative to regional peers, underpinned by tourism, trade, and foreign direct investment.³ Its GDP growth ran at 9.4% in 2024. The IMF projects Georgia will lead Europe in average annual growth between 2025 and 2030, at roughly 5.2%.⁴ Those are not figures that belong to a fragile frontier economy.

And yet, Batumi’s property prices remain well below comparable coastal cities in Eastern and Southern Europe. That gap, between fundamentals that are already improving and prices that have not fully caught up, is the asymmetry investors are buying.

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What Yield Compression Actually Tells You

One of the clearest signals that capital is arriving in a market is yield compression. Emerging real estate markets carry elevated rental yields as compensation for uncertainty and thin liquidity. As institutional interest grows and demand scales up, those yields compress. That compression is what drives capital appreciation for early holders.

Admittedly, Batumi sits in the early-to-middle stretch of that curve. Gross rental yields across much of the market are still running in the high single digits, particularly in short-term rental assets with good coastal positioning. These make it one of the best cities to invest in real estate for income-focused buyers. Knight Frank’s data on prime European residential markets consistently shows yields in the 3–5% range across mature coastal destinations.⁵The spread between those numbers and what Batumi currently offers is not sustainable long-term if demand keeps building, and there is every reason to think it will.

Investors are pricing in what happens when Batumi fully joins the ranks of the best cities to invest in real estate globally.

“Emerging real estate markets carry elevated yields as compensation for uncertainty. As institutional demand scales up, those yields compress—and early holders capture the appreciation that compression produces.”

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Three Demand Streams, One Market

Batumi draws from three distinct demand pools, and the fact that they operate somewhat independently of each other is a meaningful structural advantage.

Tourism is the most visible one. Batumi International Airport posted a 52% jump in passenger traffic in 2024, reaching 945,000 passengers. Expansion plans are already in motion to accommodate continued growth.⁶ The Georgian government reported record tourism revenues of $4.4 billion for 2024 as a whole, and the first half of 2025 saw nearly $2 billion in tourism-related income flow into the country.⁷International guests staying in the Adjara region, which encompasses Batumi, average 7 to 8 nights per visit.⁸That dwell time matters a great deal for short-term rental underwriting.

Tourism alone has driven massive growth, but what makes Batumi one of the best cities to invest in real estate is the diversity of demand.

The second demand stream is regional mobility capital. Several neighboring countries are dealing with economic or political instability that pushes outbound capital toward stable, accessible jurisdictions. Georgia’s legal framework—which allows foreign nationals to purchase property with no special permits, no residency requirement, and no local identification number—makes it one of the more frictionless destinations for that capital to land.⁹The country has become one of the best places to buy rental property.

The third stream is the one that gets underestimated most often: digital nomads or location-independent professionals. Remote workers and digital entrepreneurs are not just passing through; they are long-stay tenants who want livability, cost efficiency, and connectivity. Batumi scores well on all three, making it one of the best cities to invest in real estate. The profile of this tenant base means lower vacancy rates and more consistent income than pure seasonal tourism would produce on its own.

According to the World Tourism Organization, secondary coastal destinations with favorable cost structures have seen outsized recovery in travel demand—particularly among longer-stay visitors.¹⁰ Batumi fits that profile closely.

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Why Regulatory Simplicity Is Actually an Edge

Most sophisticated investors have been burned at least once by jurisdictions where the ownership rules looked clean until something went wrong. Georgia’s track record on this front is notably better than most of its regional neighbors. The country has ranked consistently well in the World Bank Ease of Doing Business Index on property registration and investor accessibility, and the foreign ownership framework is genuinely permissive—no heavy restrictions, no complicated approval chains, no local partnership requirements for standard residential and commercial property.¹¹ These and other factors contribute to making Batumi one of the best cities to invest in real estate.

Income from rental activity is taxed at a flat 5%. There is no VAT on property purchases. Capital gains are not taxed if the asset is held for at least two years. And purchasing real estate worth $100,000 or more opens eligibility for permanent residency.¹²

Simplicity, in an investment environment where execution risk has become a real concern, is a genuine competitive advantage. Georgia has it in ways that larger, more bureaucratically complex markets often do not. It’s exactly what investors look for when evaluating emerging real estate markets and secondary real estate markets.

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Infrastructure Spending as a Leading Signal

Infrastructure tends to move before prices do in a real estate market. Roads, airports, utilities, and connectivity improvements change the trajectory of an area before the wider market registers the shift. Investors who learn to read infrastructure spending as a forward indicator, rather than a lagging confirmation, tend to enter earlier and exit cleaner.

In Batumi, both public and private investments are accelerating development, strengthening its position as one of the best cities to invest in real estate. The Asian Development Bank has backed multiple urban development and connectivity initiatives in Georgia, with a specific emphasis on tourism-linked investment as a growth driver.¹³ The Batumi airport expansion is underway following its record 2024 numbers.

Projects backed by international institutions and large developers signal long-term confidence—one of the clearest indicators of the best cities to invest in real estate. The broader Adjara region has a master plan developed by Colliers International and HOK, the global architecture firm, that envisions beachfront hotels, a financial center, a Special Economic Zone, and integrated resort development in the Gonio–Kvariati corridor.¹⁴

None of this lands in property prices immediately. But it extends tourist seasons, improves occupancy rates, raises the quality of the built environment, and changes what kind of tenant the market can attract. That is what investors are buying when they buy ahead of the infrastructure curve.

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The Behavioral Shift Nobody Is Advertising

There is something larger at work here beyond the specific numbers. The investor appetite for primary-market exposure has quietly changed since 2020. Currency volatility, inflation cycles, and geopolitical fragmentation have made investors more focused on resilience and less tolerant of paying premium prices for assets that carry meaningful political or regulatory tail risk.

Predictability has become a genuine underwriting criterion in cross-border real estate. BlackRock has highlighted the growing weight that institutional allocators are placing on income stability and downside protection in real asset portfolios—not just return potential.¹⁵Secondary coastal real estate markets, when they check the boxes on macro stability, legal clarity, and yield, tend to benefit from that behavioral rotation. Investors end up there not because it was their first choice, but because the alternatives have become harder to justify.

The investors who identified this pattern in Dubrovnik in the mid-2000s, or in Montenegro a decade later, were not speculating. They were reading structural signals that most people were not looking at yet.

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Why the Window Is Still Open

Here is where Batumi’s real estate investment timing matters most. Its market is past the point of being unknown—that phase ended a few years ago. But it has not yet reached the stage where institutional capital has entered at scale and absorbed the pricing gap. That middle stretch is where the most attractive entry points tend to live, the best places to buy rental property.

McKinsey’s research on urban growth cycles shows that cities moving from regional hubs toward international destination status tend to see sharp capital inflows before they hit pricing equilibrium.¹⁶ The rerating, when it comes, tends to happen faster than most people expect. Eagle Hills—the Abu Dhabi-based developer behind the Gonio marina complex, whose chairman Mohamed Alabbar has overseen more than $350 billion in development value across 18 countries—has already committed $6.6 billion to Georgia.¹⁷That kind of anchor investment does not sit still. It draws co-investment, changes the perception of the market, and accelerates the timeline.

With major institutional backing and prices still below $2,000 per square meter, Batumi stands out as one of the best cities to invest in real estate before full market maturity. For a Black Sea coastal market with the volume of committed infrastructure and depth of institutional backing it enjoys, that price point will not hold indefinitely. It is not a matter of whether it closes. It is a matter of when.

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A Final Word

Capital does not move toward a story. It moves toward a set of conditions, and then the story follows. In Batumi, the conditions have been assembling for several years: consistent sovereign outperformance, an airport posting 52% passenger growth, a $6.6 billion institutional anchor on the coastal corridor, a legal framework built with foreign buyers in mind, and property prices that have not yet closed the gap with the fundamentals supporting them. These make it one of the best cities to invest in real estate.

The broader trend toward secondary coastal real estate markets will not reverse. Primary cities will continue to compress. Global capital will continue to look for yield with macro coherence attached to it. Cities like Batumi are the best to invest in real estate. They will keep moving from the edges of the allocation conversation toward the center of it.

The investors who get there early are not betting on an idea. They are reading a pattern that has already started and acting while most people are still deciding whether to take it seriously.

Investment Disclaimer

This article is produced for informational and research purposes only and does not constitute financial, legal, or investment advice. Real estate investments carry inherent risks, including potential loss of capital. Past performance of any market is not indicative of future results. All data cited reflects sources available at time of publication. Investors should conduct independent due diligence and consult qualified professional advisors before committing capital to any investment.

References

(1) IMF Cross-Border Investment Reports, 2023–2024. (2) Georgian National Tourism Administration Annual Report, 2024. (3) World Bank Georgia Country Economic Update, 2024. (4) IMF World Economic Outlook; Galt & Taggart Market Report Q2 2025. (5) Knight Frank Global Residential Cities Index, 2025. (6) LDR Group Georgia Airport Report, January 2025. (7) Georgian National Tourism Administration; Site Selection Magazine, 2025. (8) Cushman & Wakefield Georgia Q1–Q2 2025 Overview. (9) Globihome Batumi Real Estate Analysis, October 2025. (10) UNWTO Tourism Recovery Tracker, 2024. (11) World Bank Business Ready (B-READY) Rankings 2024. (12) Georgian Tax Code; Globihome Batumi Investment Analysis, 2025. (13) Asian Development Bank Georgia Country Program, 2023–2025. (14) Colliers Georgia / HOK Adjara Regional Master Plan, 2025. (15) BlackRock Real Assets Outlook, 2024. (16) McKinsey Global Institute Urban World Report. (17) Gulf News “Why Invest in Georgia,” October 2025; Site Selection Magazine, 2025.