Georgia Sets $27.3 Million Floor for Soviet Spa Complex Sale

The Georgian government has listed ten deteriorating Soviet-era sanatoriums in the spa town of Tskaltubo for auction. The online bidding process, which began on October 20, concludes on November 15. The state is seeking buyers who will commit to substantial capital improvements in addition to the purchase price.

The centerpiece of the sale is the Medea sanatorium. Tbilisi is asking for an initial sum equivalent to $3.3 million. The winning bidder must pledge an additional $24 million toward a five-year renovation plan. This investment must result in at least 120 guest rooms, conference halls, and restaurants. The other nine properties carry similar obligations, with starting bids ranging from $1 million to $3.5 million.

Frederic Le Fichoux, a commercial real estate expert who contributed to a 2020 feasibility study for the town, questioned the strategy. He argued that renovating isolated buildings fails to address the town's neglected infrastructure. "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 stated that public funding for roads and access is necessary to support private reinvestment.

The state has previously attempted to privatize these assets. Seven sanatoriums were sold in earlier auctions, but three have since returned to state ownership. Medea was reclaimed in 2024 after its buyer failed to meet contractual obligations. David Sichinava, a Canada-based academic who grew up in Tskaltubo, described the redevelopment approach as "all or nothing." He noted that the town is exempt from casino permit fees, which can cost up to $1.9 million annually elsewhere in Georgia. Sichinava said, "Balneology (the science of therapeutic use of baths) alone can't really support the kind of tourists that this town can host."

Bidzina Ivanishvili, the founder of the ruling Georgian Dream party, promised to buy the spas in October 2019. He called their condition "depressing" and pledged a "full-scale rehabilitation." Prime Minister Irakli Kobakhidze told media on October 20 that the plan was dropped due to the pandemic and "de facto sanctions" against Ivanishvili.

Since the 1990s, the buildings have housed people displaced by conflicts in Abkhazia and South Ossetia. Most residents have moved out, with Sichinava estimating that only 100 to 200 displaced people remain. Madonna Mushkudiani, who fled Abkhazia in 1992 and relocated to an apartment in 2023, said conditions in the partly derelict building were poor. She added, "We miss every minute we spent there. It was our second home."