The new "law on apartments" in Abkhazia: why is it forbidden to sell real estate to foreigners?
Abkhazian real estate law
Abkhazia intends to allow foreigners to build and purchase apartments. Until now, foreign citizens had no right to buy residential real estate, but the new “law on apartments”, if adopted, will allow this ban to be circumvented. Many in the republic are not enthusiastic about the prospect and consider it potentially dangerous.
Why is it forbidden to sell real estate to foreigners?
The ban on the sale of residential real estate to foreigners is one of the most painful topics regularly discussed in society. The ban is explained by the fear of Abkhazians finding themselves in a minority in their homeland, with all ensuing threats of losing the sovereignty of the republic.
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But despite the ban, housing is still being sold to foreigners, mainly Russians, illegally. According to data recently announced by Prime Minister Alexander Ankvab, more than five thousand such transactions have already been made.
From time to time, the Kremlin transparently hints to the Abkhazian government that the ban should be lifted. Until now this has not happened, but it appears the wind is changing.
The administration of the President of Abkhazia, Aslan Bzhaniya, has developed a bill “On the regulation of the legal status of apart-hotels and apartments.”
“Apart-hotels”, i.e. vacation apartments, will be considered not residential but commercial real estate and thus subject to sale.
According to the government, this will allow Abkhazia to attract large investments to the local economy without jeopardizing national security, as well as create new jobs and significantly increase budget revenues.
The draft law, published on the government website, contains the following provisions:
-land plots allocated for apartments remain the property of the state;
– the right to own an apartment does not entail the right to obtain citizenship or a residence permit; the owner of the apartment shall not have the opportunity and the right to take part in the political life of Abkhazia.
Through the construction of apartments, the government of the republic intends to change the image of the country from the well-established summer vacation for the poor to a year-round getaway for the rich.
In addition to existing taxes, it is planned to introduce a new tax levy, entirely designed to solve the housing problems of Abkhaz citizens who are in line for social housing. Bzhaniya promises to “completely solve this problem within 10-15 years and start providing housing for young families” with the new tax.
Arguments against
Opponents of the law cite the following arguments:
- It will still upset the demographic balance. Although the law does not give apartment owners the opportunity to directly apply for citizenship, there are many loopholes to obtain an Abkhazian passport if they are permanently on the territory of the republic;
- Given the current level of corruption, the best lands, including those under conservation, will be used for the construction of apartments.
- Housing prices will rise sharply, and it will no longer be affordable for most citizens of the republic;
- the sale of apartments will have a negative impact on the occupancy of both large hotels and small guest houses. That is, small and medium-sized businesses focused on the tourism industry may suffer. The local construction business will also have a hard time, because it is unlikely unable to compete with foreign ones (which, moreover, will be stimulated by the Abkhaz authorities with various kinds of tax incentives).
Blogger opinion
Blogger Dmitry Mushba also gives a rather gloomy forecastsabout the possible socio-economic consequences of the adoption of the new law.
In his opinion, only Russian businessmen affected by sanctions and their Abkhaz intermediaries will benefit:
“Big Russian business now, by and large, has nowhere to safely invest its capital. Russia is huge, but the most attractive territories have long been occupied, distributed and developed.
In Abkhazia today you can earn very good, even by Russian standards, money. And doing business in Abkhazia is much easier than in Russia.
However, in order to safely conduct business in Abkhazia, trusted people are needed. This is where “Abkhazian” businessmen appear who are actually quite Russian, just ethnic Abkhazians.
As a result, a situation is emerging in which a lot of money from Russian financial groups enters our republic through the mediation of our fellow citizens.
Is it good or bad? Investing in the economy is always good: taxes, jobs, and so on. But local business – that is, a real Abkhazian business based in Abkhazia and being a tax resident of Abkhazia – this law will certainly put in unequal conditions, since all the best lands will be bought out by Russian capital very quickly. Local entrepreneurs will not be able to compete with investment funds, large banks and financial groups. Hence the position of the Chamber of Commerce and Industry of Abkhazia, which spoke out against this bill. I believe that the opinion of the Abkhaz business should be taken into account when resolving this issue.
At the same time, it is impossible to sit on the ruins of the past forever; it is necessary to use existing potential. In order to prepare an effective law, we need the coordinated work of professionals from various fields who approach the issue with all responsibility.”
Mushba expresses fear that a crude document that does not take into account threats and does not meet risks will be adopted, and recalls that this has already happened more than once — for example, with the legalization of mining.
And, not relying too much on the parliament in this matter, the blogger pins his hopes only on civil society, “which has more than once saved Abkhazia from the fate of colonial countries.”
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