Building anything in Georgia just got noticeably more expensive. The country’s official statistics agency, Geostat, confirmed in early May that the Construction Cost Index rose 2% year-on-year in March 2026. Two forces are doing most of the damage: a sustained rise in worker wages and a sharp spike in energy and fuel costs. With civil and non-residential segments bearing the heaviest burden, the ripple effects are landing directly on Georgia’s record-breaking property market.
What Geostat’s March 2026 Data Actually Shows
The headline figure is a 2% annual increase in the Construction Cost Index for March 2026. The details inside that number tell a more specific story about where the cost pressure is truly concentrated.
Worker wages are the single biggest cost driver behind the annual rise. The average monthly nominal wages of construction employees grew 2.7% year-on-year in March, contributing 1.35 percentage points to the total index change. That one factor alone accounts for more than half of the entire annual increase.
Transport, fuel, and electricity costs rose 4.3% over the same period, adding 0.62 percentage points. Together, wages and energy costs explain virtually the entire upward movement in the annual index.
The monthly picture is even more striking. Compared to February 2026, the overall index climbed 1.9% in March. Behind that monthly jump was a 7.7% surge in transport, fuel, and electricity costs in a single month, contributing 0.94 percentage points. A one-month energy cost jump of that scale signals something significant was shifting in the market well before the monthly data was published.
Why Energy Costs Delivered a Sudden Shock in March
The steep monthly energy cost surge in March 2026 was not random timing. It arrived directly ahead of a major electricity and gas tariff revision that came into force across Georgia on April 1, 2026.
That tariff change left an immediate footprint across Georgia’s broader economy. Housing and utility costs rose 6.5% year-on-year in April, directly linked to the new tariffs. Annual inflation in Georgia reached 5.9% in April 2026, the highest level recorded since February 2023, according to Geostat data released on May 4.
Transport inflation accelerated even harder, jumping 10.3% year-on-year in April. Higher fuel prices drove a 15.1% increase in personal vehicle operation costs and a 9.2% rise in transport service costs. For construction logistics, that means the cost of moving materials, equipment, and workers to project sites jumped sharply at exactly the same time as energy bills climbed.
Construction operations are energy-intensive by design. Cranes, cement mixers, heavy drilling equipment, site lighting, and compressors all run on electricity or fuel. Every unit of energy that costs more goes directly onto the project balance sheet, with no quick or easy way to absorb it without affecting either margins or final prices.
Which Construction Segment Is Under the Biggest Pressure
Geostat breaks Georgia’s Construction Cost Index into three main segments. The March 2026 data shows the pressure is not evenly distributed across the industry.
| Segment | Month-on-Month Change | Year-on-Year Change |
|---|---|---|
| Residential | +0.4% | +0.2% |
| Non-Residential | +2.1% | +3.2% |
| Civil Construction | +3.2% | +3.3% |
Civil construction posted the strongest increases across both timeframes. Georgia is currently in the final stages of several major infrastructure commitments. Strategic highway completions linking the country to Azerbaijan and Armenia are at advanced build stages. Tenders for the Tbilisi bypass Lot 2, stretching from Tskneti to Avchala, have already been announced by Infrastructure Minister Revaz Sokhadze for 2026 construction start.
Non-residential construction followed closely, growing 2.1% month-on-month and 3.2% year-on-year. Commercial development and mixed-use projects in Tbilisi and Batumi, backed by both domestic and international investors, have kept this segment under consistent cost pressure throughout 2025 and into 2026.
Even the mildest residential increase carries significant real weight today. The overall Construction Cost Index has risen 26% compared to February 2022, according to data published by Geostat. Every new percentage point is stacking on top of a base that is already dramatically higher than four years ago.
How These Costs Are Shaping Georgia’s Property Market
Rising construction costs do not stay inside the building site. They travel directly into apartment prices, developer margins, and the affordability of housing for ordinary Georgian families.
Tbilisi’s residential real estate market closed the first quarter of 2026 at a record high. According to Galt and Taggart data published in May 2026, approximately 10,900 apartments worth around $958 million were sold in the capital between January and March 2026, with demand up 15.9% year-on-year. Primary market sales, meaning apartments sold directly by developers, grew 36% in March alone compared to a year earlier.
The average price per square meter in Tbilisi rose 6% to $1,343 in Q1 2026, according to TBC Capital data. Analysts at both TBC Capital and Galt and Taggart have cited high construction costs as one of the structural factors making a meaningful price drop in 2026 unlikely.
Here is what is currently adding to construction prime costs across Georgia right now:
- Wages rising above inflation: Construction sector wages are growing faster than Georgia’s average annual inflation rate
- April 2026 tariff hike: New electricity and gas tariffs effective from April 1 drove utility costs up 6.5% annually
- Fuel price surge: Transport inflation hit 10.3% year-on-year in April, pushing logistics costs higher
- Stricter safety codes: New construction standards and enhanced engineering requirements have raised the base cost of every new project
- Land scarcity: Available land for multi-apartment developments is becoming increasingly limited in Tbilisi and other major cities
Georgia’s economy grew 10.7% in March 2026 and 9.1% across the full first quarter of the year, based on Geostat’s rapid GDP estimates. The country remains one of the fastest-growing economies in the entire region. But rapid economic growth and rapidly rising construction costs are two sides of the same coin in a market where building activity is a major growth driver.
The residential real estate market reached a total historical volume of $4.3 billion across Tbilisi and Batumi in 2024, and the 2026 trajectory suggests the market is surpassing that. But volume records at the top of the market offer little comfort to buyers trying to afford their first apartment in Gldani or Samgori.
What Georgia is experiencing right now is the complicated side of genuine economic success. Workers in the construction sector earning more is a real sign of a growing economy. Infrastructure projects completing on time reflects years of national investment. But the same forces that are raising wages and driving energy demand are also squeezing project budgets, raising apartment prices, and testing the limits of what ordinary Georgian families can afford. The months ahead will show whether policymakers, developers, and the broader market find ways to ease that squeeze or whether the cost spiral continues pushing homeownership further out of reach for many. What do you think? Is Georgia’s construction cost surge a manageable growing pain, or is it a deeper structural challenge that needs urgent attention? Drop your opinion in the comments below.
