Tskaltubo Auction: $24 Million Repair Mandate Tops $3.3 Million Medea Bid

The Georgian government has listed ten deteriorating Soviet-era sanatoriums in Tskaltubo for online auction, a process that closes on November 15. The properties were officially listed on October 20, marking the latest attempt to monetize the spa town's infrastructure.

The most prominent asset is the Medea sanatorium, known for its neoclassical arches. Tbilisi has set the starting bid for this building at the equivalent of $3.3 million. However, the purchase price is only a fraction of the total financial commitment required. The buyer of Medea must commit an additional $24 million to complete a five-year renovation. This overhaul must result in at least 120 guest rooms, plus conference halls and restaurants.

The other nine properties in the auction follow a similar model. Initial prices for these buildings range from $1 million to $3.5 million, but each comes with binding pledges for substantial renovation investment. The government aims to transfer the burden of structural repairs to private owners rather than the state treasury.

Frederic Le Fichoux, a commercial real estate expert who contributed to a 2020 feasibility study on the town, warned that isolated building renovations may not suffice. He noted that the wider infrastructure in Tskaltubo remains neglected. "If you are one investor and you buy, you renovate that property that you bought, you turn it around," Le Fichoux said, "but then the rest of the destination is still kept as a ruin." He argued that public funding for roads and access is necessary to support private reinvestment.

The state has a mixed track record with these assets. Seven sanatoriums were sold in previous auctions, but three have since reverted to state ownership. Medea was taken back in 2024 after its previous buyer failed to meet contractual obligations. David Sichinava, a Canada-based academic, described the redevelopment strategy as "all or nothing." He highlighted that Tskaltubo is exempt from permit fees for casino operators, a privilege that can save up to $1.9 million annually compared to other regions in Georgia.

The town gained national attention in October 2019 when Bidzina Ivanishvili, founder of the ruling Georgian Dream party, pledged to buy the spas and call their condition "depressing." He promised a "full-scale rehabilitation," but the plan stalled. Prime Minister Irakli Kobakhidze stated on October 20 that the pandemic and "de facto sanctions" against Ivanishvili caused the delay.

The buildings have also served as housing for people displaced by conflicts in Abkhazia and South Ossetia since the 1990s. Most residents have moved out, though Sichinava estimates 100 to 200 displaced people still live in the structures. Madonna Mushkudiani, who fled Abkhazia in 1992, moved into one of the sanatoriums before being relocated to an apartment in 2023. She said she still visits former neighbors, noting, "We miss every minute we spent there. It was our second home."