with support of its Real Estate management Fund (RMF) was putting together the financing for one of its properties outside Tbilisi, RMF was responsible for newly built white finish building in one of the major cities in Georgia. The best use of property had not been yet determined; there were five potential uses considered.

TBSC Consulting was asked to collect information and do analysis that would help the bank decide what the highest and best use for the existing building would be.

The standard survey approach used by research companies could not be applied for this project – it required innovative tailored approach. Property was outside Tbilisi, it included wide range of uses and limited data was available or could be obtained through traditional survey work. Our task was to design analytical approach that would take data that was available, analyze it in a imaginative manner to give information and results that could be used for informed decision making.

For each of the potential uses we determined supply (quantity/price) and demand (quantity/price), competitors, product features and expected market development trends. Additionally we estimated likely cost structures for each of the uses.

Using different sources of information we developed good understanding in a number of areas. We gained good understanding of current supply/gaps in supply and demand (quantity/prices) through in-depth interviews with local experts and census of all relevant local potential competitors. Demand and customer attitudes towards current supply were further investigated through meetings with current and potential users. Finally, perspectives of city development during the next five years were identified through meetings were held with different ministries and local Government representation.

Operating cost/revenue structures and profit margins for different potential uses were determined. We used the best available international cost structures and then adjusted them to better match them with local conditions and the Bank’s property in particular. Meetings with owners of potential uses in Georgia were held to make the proper adjustments/localization of the cost/revenue structures.

All this data was combined to estimate expected financial returns of each use. The detailed analysis was conducted to provide guidance to the Bank on decisions to be made related to the Bank property. We provided insights into the current and future supply/demand on the markets for different potential uses. We estimated cost structures of alternative uses and indicated the required break-even point and included guidance on likelihood of achieving the break-even point for different capacities of uses. Finally, we gave our recommendation on the most profitable use of the property by taking into account the results of conducted analysis.

TBC Bank is presently in process of designing the final use of the property following our findings and recommendations.