Georgia auctions Soviet spas with $24 million repair condition

A buyer of the Medea sanatorium must commit $24 million to renovations before they can even start using the property. The Georgian government listed the building for sale on October 20, setting the initial bid price at $3.3 million. The online auction closes on November 15. The total acquisition cost for Medea reaches $27.3 million when the mandatory repair investment is included.

Tskaltubo is a spa town south of Tbilisi that relied on Soviet-era trains from Moscow. Visitors historically came for baths in warm, mildly radioactive mineral water. The Medea sanatorium is the most recognizable structure in the town, known for its neoclassical arches. The government is auctioning ten such buildings, all of which are in disrepair. The other nine properties have starting prices between $1 million and $3.5 million, with similar binding renovation clauses.

Frederic Le Fichoux, a commercial real estate expert who worked on a 2020 feasibility study for the town, warned that fixing individual buildings may not be enough. He noted that the wider infrastructure 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 funds are needed for roads and other access improvements to support private reinvestment.

The state has previously attempted to sell these assets. Seven sanatoriums changed hands in earlier auctions, but three have reverted to state ownership. Medea was one of the properties returned to the government in 2024 after its buyer failed to meet contractual obligations. The current auction includes specific performance requirements to prevent similar failures.

David Sichinava, a Canada-based academic who grew up in Tskaltubo, described the redevelopment strategy as "all or nothing." He pointed to a specific legal advantage for the town: it is exempt from permit fees for casino operators. These fees can cost up to $1.9 million annually in other parts of Georgia. "Balneology (the science of therapeutic use of baths) alone can't really support the kind of tourists that this town can host," Sichinava said.

The town gained political attention in October 2019 when Bidzina Ivanishvili, founder of the ruling Georgian Dream party, promised to buy the state-owned spas. He called their condition "depressing" and pledged a "full-scale rehabilitation." Prime Minister Irakli Kobakhidze stated on October 20 that the plan was abandoned due to the pandemic and "de facto sanctions" against Ivanishvili. The project never moved forward.

Since the 1990s, the sanatoriums have also served as housing for people displaced by the conflicts in Abkhazia and South Ossetia. Most residents have moved out. Sichinava estimates that only 100 to 200 displaced people still live in the buildings. Madonna Mushkudiani, who fled Abkhazia in 1992, moved into one of the properties. 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," Mushkudiani said.