MARINE NATSVALADZE, NINO BERAIA Ivane Javakhishvili Tbilisi State University Department of Economics and Business The Problems of Improvement of the Registration and Appraisal of Agricultural Land Plots in Georgia MARINE NATSVALADZE, NINO BERAIA

The Object of Research An existing system of agricultural land plot property rights registration; Land governance system in Georgia; Methodology of the appraisal of normative value of the agricultural land plots.

Main Drivers of Sustainable Development of Economic and Social Environment of Georgia Improving of existing property rights registration system; Developing the transparent system of agricultural land plot property rights; Protecting property rights on land; Creating land valuation methodology; Improving land governance.

This Will Improve the investment climate; Improve accessibility of the loans; Increase the productivity of agricultural sector; Help to reduce poverty.

Agricultural Land Reform 1992 year - “Agricultural land reform in Republic or Georgia” –resolution #48 of Ministers Cabinet of Georgia; Mass privatization of state land; Arable land and land plots with Perennials were transferred to population - without formal declaration of property rights.

Agricultural Land Reform - Problems: The population had no basic knowledge and information about its property rights; Land plot fragmentation; Was not constructed new infrastructure; Mass demolishing of old roads, irrigation , drainage systems and other structures; State and private ownerships were not separated clearly; State retained control on more than half of agricultural land plots (perennial meadows and pastures); Was started the process of state land leasing.

Distribution of land plots by size: Source: National Statistics Office of Georgia, data of 2004 survey Was created two market sectors in Georgia: Small farms - land acquired through distribution of 1.25 ha land plots by the state; Market oriented big farms – lessors of large state owned agricultural

Further Steps: 1999 – 2004 (#327 decree of President) Issuing the formal ownership documents on land signed by president; 2004 The Law on Public Registry; State Department of Land Management was merged with Public Register; Old Technical bureaus were closed.

Starting from 2008 - Formation of Unified Cadastral System with Help of International Donors: World Bank U.S. Agency for International Development, German Bank for Reconstruction and Development United Nations Development Programme.

Public Registry Agency, Ministry of Justice

Formally the Formation of Land Market is Finished, but Still Unknown The total area and quantity of land plots in private sector; The share of the state owned land plots and their exact location; There are some land plots in so called “Grey zone”.

General Recommendations for mprovement of Land Governance: The accomplishment of GIS Database and Spatial Planning; The improvement of land appraisal system; The improvement of Spatial Planning and the starting of land reorganization; Solving the problem of land fragmentation via its consolidation; Paying more attention to the Land Market; Improvement of structure of transactions Database.

Agricultural Land Plot Mass Appraisal Methodology: in Georgia tax amount is based on uniform normative value of land; there is no agricultural land plot taxation system based on current market values of the land plots The proposed methodology suitable for the accessible data sources in Georgia; Suitable for the specificity of local market; Defines value of land plot very close to actual current market value.

Agricultural Land Plot Mass Appraisal Methodology: Database of Transactions of National Registry Agency 2012-2015 transactions of agricultural land plots in Marneuli region of Georgia. Marneuli Region has 18 subzones. From total 3841 transactions were excluded transactions with zero transaction value; land plots with total area less than 600 sq.m. land plots with buildings exceeding 50 m2; between the related parties.

Agricultural Land Plot Mass Appraisal Methodology: In the analyses were included 2755 transactions in 18 subzones: Subzone 2012 2013 2014 2015 Algeti 61 97 44 66 Akherpi   2 Damia 20 33 35 Tamarisi 10 11 6 3 Kapanakhchi 55 154 84 62 Kasumlo 91 46 Kachagani 41 23 40 Opreti 7 1 Sadakhlo 15 21 Marneuli 125 171 124 59 Kutliari 47 34 18 Kizilajlo 49 53 Kulari 50 28 Shaumiani 14 Shulaveri 112 71 74 58 Tserakvi Tsereteli 22 43 26 Khojorni

Dynamics of Land Plot Market in Marneuli Region Figure 1. Prices of 1 m2 agricultural land plots in Ateni subzone Figure 2. Number of Agricultural Land Plot Transactions in Marneuli Region

Agricultural Land Plot Mass Appraisal Methodology: In subzones where number of transactions exceeded 15 Defined values of first and third quartiles of time series calculated the mean of members between first and third quartiles. Figure 3. Distribution of prices of 1 m2 Agricultural land plots in Ateni subzone, 2015 year

Agricultural Land Plot Mass Appraisal Methodology: For the subzones where the number of transactions did not exceed 15 (or equals to zero) Normative value calculation method: Income approach (IVSC, 2013) or adjusting normative value of the subzone next to the subject. (The coefficient based on the Bonitet score of land plot).

Agricultural Land Plot Mass Appraisal Methodology: Map or soils, Georgia The Bonitet score shows the productivity of the land plot and indirectly affects the value of the agricultural land plot.

Thank you for attention Marine Natsvaladze Phd. marine.natsvaladze@tsu.ge Nino Beraia ninoberaia@gmail.com