An analysis of the real estate market in Tbilisi shows that prices have risen faster than rents in recent years. As a result, property owners earn less rent per U.S. dollar/Lari of investment today as compared to several years ago. This trend may be due to improved political and economic conditions, strong economic growth and rising incomes. Another factor may be that speculative property buyers are driving up prices based on very optimistic expectations about future price increases. This paper presents a framework for analysing Tbilisi’s real estate market that is based on standard real estate economics taught at Western business schools. Future analysis is needed to quantify the factors that drive the recent boom.