Shovi Resort Development Plans Aim to Attract $60 mln in FDI

A new plan to turn the small resort village of Shovi in the Racha region into a massive tourism complex is being led by real estate development firm Simetria. Simetria is a member company of Capitol Management, an investment management and support company.

Initial speculation over the plans surfaced in February, when Simetria signed a cooperation agreement with the Kazakh Business Group, which owns the rights to 60% of the territory of the Shovi Resort. Within the terms of the agreement, Simetria will take the lead in developing the Shovi Resort into a unique, luxury tourist center in Racha. The project is currently in the exploratory stage, analyzing the 16 different mineral waters that the resort claims, and finalizing the development plan for utilizing the balneological and mountain tourism resources. Expert consultants from Austria and Germany have been hired to support the process. Simetria’s webpage explains that “all of [their] projects...rely upon reliable and up-to-date market research and analysis.”

Capitol Management has expressed its expectations that the project will attract approximately $60 million in foreign direct investment.

“The project will arrange for a new and unique tourism center in Georgia, which will host about 56,000 high-income tourists every year. The Racha region is the second poorest region in Georgia, after Guria. Therefore, attracting tourist inflows to this area will essentially improve the economic situation in the region,” Capitol Management representatives told in February.

Simetria has pledged to actively cooperate with local and national governments, private businesses in the region, and the local residents to ensure that the new Shovi Resort respects the natural environment and local conditions. The company explains that they aim to create “interesting and original concepts distinct from other projects on the market.”

It was announced this past week that negotiations are now underway with the Georgian Partnership Fund, which Simetria expects will result in a $15 million input from the Fund. The state-owned Partnership Fund has an equity value of 1.4 billion GEL ($50 mln). It provides equity financing to financially viable projects, focused on foreign investors. The Partnership Fund acts as a “silent partner,” to decrease the risks of investing in Georgia for new foreign investors. The Fund finances a maximum of 49% equity and offers managing partners the option to buyout Partnership Fund shares at any point. The shares can also be sold on the market. Tourism is a priority sector for the Fund.

In August of last year, Prime Minister Mamuka Bakhtadze visited Ambrolauri, the administrative seat of Racha, and announced his plan to transform the region into a major tourist destination with year-round appeal. “Our aim is to turn Racha into a four-season destination,” said Bakhtadze, “Our goal should be to at least triple the number of tourists and visitors coming to this region of the country.” He pledged increased investment to improve infrastructure and support local businesses. “21 infrastructure projects are being implemented, of which 18 are close to completion. It is essential to maintain momentum in the construction and rehabilitation of rural roads,” the Prime Minister confirmed. One infrastructure project in the pipeline is the plan to expand the small airport in Ambrolauri to accommodate higher tourist flows. Bakhtadze claimed that only 10-15% of the full potential of the region is being realized. “The next stage will of course involve the rehabilitation and development of very important tourism sites in Shovi and other destinations,” Bakhtadze hinted in August.

Simetria was founded in 2015. Its webpage describes its mission as “to maintain the best architectural environments for residence, work, relaxation and entertainment.” The company develops hotels, residential homes, business centers, parking lots, and retail centers.

Shovi is an alpine health resort perched on the slopes of the Greater Caucasus Mountains at 1600 meters above sea level. The area is best-known for hiking trails through rich forests to glaciers and lakes, and its various mineral water springs. The current complex offers a few small cottages and a rustic, local feel. Simetria plans to begin construction next year.

By Samantha Guthrie

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13 May 2019 18:03