Georgia auctions Tskaltubo spas with mandatory renovation clauses

Georgia’s government has listed ten dilapidated Soviet-era sanatoriums in the resort town of Tskaltubo for sale. The online auction closes on November 15, following the October 20 listing of the properties.

The state seeks the equivalent of $3.3 million for the Medea sanatorium. A successful bidder must also pledge $24 million toward a five-year renovation. That funding must deliver at least 120 guest rooms, conference halls, and restaurants. The other nine buildings carry similar terms. Initial prices range from $1 million to $3.5 million, with additional renovation pledges required for each.

Frederic Le Fichoux, a commercial real estate expert who contributed to a 2020 feasibility study, warns that the conditions address a structural gap. He notes that restoring a single building does not fix the town’s wider infrastructure. "If you are one investor and you buy, you renovate that property that you bought, you turn it around," he said, "but then the rest of the destination is still kept as a ruin." Le Fichoux argues that public money is needed for roads and access alongside private investment.

The state has attempted to sell these assets before. Seven sanatoriums sold in previous auctions, but three have returned to state ownership. Medea was reclaimed in 2024 after its buyer failed to meet contractual obligations. David Sichinava, a Canada-based academic, describes the redevelopment strategy as an "all or nothing" approach. He notes that Tskaltubo is exempt from casino permit fees that can reach $1.9 million annually elsewhere in the country. "Balneology alone can't really support the kind of tourists that this town can host," he said.

The town drew national attention in October 2019. Bidzina Ivanishvili, founder of the ruling Georgian Dream party, promised to buy the spas and perform a "full-scale rehabilitation." He called their condition "depressing." The plan never materialized. Prime Minister Irakli Kobakhidze told media on October 20 that the pandemic and "de facto sanctions" against Ivanishvili caused the project to be dropped.

Since the 1990s, the buildings have housed people displaced by conflicts in Abkhazia and South Ossetia. Most residents have moved out. Sichinava estimates that 100 to 200 displaced people still live in the structures. Madonna Mushkudiani moved into a building in 1992 after fleeing Abkhazia. She was relocated to an apartment in 2023 but still visits former neighbors. "We miss every minute we spent there. It was our second home," she said.