Georgia sets $27.3 million total cost for Tskaltubo spa auction

The Georgian government has priced the sale of the Medea sanatorium at a total obligation of $27.3 million, combining the purchase price with mandatory renovation costs. The state listed ten Soviet-era properties in the spa town of Tskaltubo for auction on October 20. The online bidding process concludes on November 15.

The base price for the Medea building is $3.3 million. However, any successful bidder must commit an additional $24 million over five years. This investment must result in at least 120 guest rooms, conference halls, and restaurants. The other nine sanatoriums in the auction have starting prices between $1 million and $3.5 million, with similar requirements for substantial reinvestment.

Frederic Le Fichoux, a commercial real estate expert who helped prepare a 2020 feasibility study, argues that these terms reflect structural issues in the town. He notes that restoring individual buildings may not attract visitors if the surrounding infrastructure remains neglected. Le Fichoux stated, “If you are one investor and you buy, you renovate that property that you bought, you turn it around, but then the rest of the destination is still kept as a ruin.” He believes the area needs public funding for roads and access to support private reinvestment.

Previous attempts to sell these properties have had mixed results. Seven sanatoriums were sold in earlier auctions, but three have since returned to state ownership. The Medea was taken back in 2024 after its buyer failed to meet contractual obligations. David Sichinava, a Canada-based academic who grew up in the town, described the redevelopment approach as “all or nothing.” He noted that Tskaltubo is exempt from casino permit fees, which can cost up to $1.9 million annually in other parts of the country. Sichinava added, “Balneology (the science of therapeutic use of baths) alone can't really support the kind of tourists that this town can host.”

The town gained national attention in October 2019 when Bidzina Ivanishvili, Georgia’s wealthiest man, pledged to buy the state-owned spas. He described their condition as “depressing” and promised a “full-scale rehabilitation.” Prime Minister Irakli Kobakhidze stated on October 20 that the plan was dropped due to the pandemic and “de facto sanctions” against Ivanishvili. Since the 1990s, the buildings have also housed people displaced by conflicts in Abkhazia and South Ossetia. Sichinava estimates that 100 to 200 displaced residents still live in the structures. Madonna Mushkudiani, who fled Abkhazia in 1992 and moved into one of the buildings, was relocated to an apartment in 2023. She said, “We miss every minute we spent there. It was our second home.”