Molly Corso in Tbilisi -

Donald Trump is coming to Georgia - and officials hope his $250m real estate deal will attract foreign investment to the tiny Caucasus country. But some analysts warn it will take more than Trump's legendary Midas touch to reassure investors.

Trump, the US real estate king, TV personality and possible 2012 presidential candidate, signed his first real estate deal in the former Soviet Union on March 10 during a lavish ceremony at Trump Tower in New York. On hand to celebrate the deal was Georgian President Mikheil Saakashvili. The 43-year-old president was instrumental in orchestrating the deal between Trump and Silk Road Group, the development group that will build the two luxury skyscrapers, and met with the real estate mogul in New York on three separate occasions.

Michael Cohen, an executive vice president at The Trump Organization and a special council for Trump, tells bne that construction of the first tower will start in Batumi after Donald Trump Jr travels to Georgia later this year. A second tower is planned for Tbilisi, the Georgian capital.

The government has been eager to present the deal as a watershed moment for Georgia's struggling effort to reignite foreign direct investment (FDI) following the disastrous 2008 war with Russia and the global economic crisis.

Alice Mummery, an economic analyst for the region at the Economist Intelligence Unit in London, says the investment will "undoubtedly" remind businesses about Georgia's potential. She warned, however, that Trump alone won't be enough to neutralise the country's long-standing risks: the threat of political instability and its unresolved conflicts. "Foreign businesses will remain cautious of investing in Georgia owing to the risk of tensions between the breakaway provinces of South Ossetia and Abkhazia and Georgia," she says.

FDI is imperative for Georgia, which is battling a growing trade deficit, high unemployment and a shrinking amount of foreign aid dollars. Foreign investment reached a high of $2.7bn in 2007 before falling precipitously. While officials predicted close to $1bn in 2010, the country attracted just a fraction of that - $553m, down 16% from 2009. Real estate was particularly hard hit last year: construction turnover was GEL1.48bn (€630 m), down nearly 15% from the previous year, according to preliminary government statistics.

Kote Gabrichidze, a real estate analyst for Tbilisi's Institute of Polling and Marketing, notes that the Trump deal is an important "indicator" for future investors, but won't be enough to return confidence to the industry. "It is a very good step, very good news for everybody, but maybe the fact that that tomorrow we will have worse inflation, which is announced on TV every day, is even 100 times [more important]," he says. "Maybe 10 or 20 Trumps have to come to make up for that."

Branded a success

There has also been widespread speculation that the deal is little more than the latest Trump branding scheme. Faced with bankruptcies and financial hiccups over the past several years, Trump has increasingly lent his name and marketing finesse - not financial power - to projects. Today, the Trump brand expansion includes products ranging from gourmet teas and ties to steaks and vodka - even a real estate project in India.

According to a press release circulated by Silk Road Group on March 16, fundraising efforts will be "coordinated" with The Trump Organization. Financing is expected from banks, financial institutions and private investors from the US and "other international investors." The Trump team will invest "a considerable amount of their resources" to the project, Giorgi Ramishvili, the founder of Silk Road Group, was quoted as saying in the press release.

Cohen wouldn't comment on the financial details of the deal, although he confirmed that it is a licensing agreement. A Georgian subsidiary of the Silk Road Group now owns exclusive rights to the Trump brand in Georgia, according to the development company. Yet Cohen insists it's a "fact" that Trump attracts investment wherever he goes. "Take any project, take Scotland [golf courses in Aberdeen]," he says. "Businesses are already following him there."

That is the reputation Tbilisi is betting on. During the signing ceremony in New York, Saakashvili praised Trump for recognising the country's potential - even joking that the possible 2012 US presidential candidate "might win" if he ran for office in Georgia.

Stephanie Komsa, an investment analyst based in Tbilisi, says the Trump deal sends a powerful "message" to businesses considering the region - regardless of whether or not he is actually investing millions in the project. "Georgia has been aiming to create itself as a regional hub, a business and tourism destination and I think Trump's decision underlines that someone from the business sector believes it is possible," she said. "Not only that Trump believes it, but Silk Road Group does too."