Tskaltubo Auction: Georgia Puts Ten Sanatoriums On Market

The Georgian government has listed ten dilapidated sanatoriums in the town of Tskaltubo for sale, creating a new market for investors willing to take on substantial repair costs. The online auction launched on October 20 and will close on November 15.

The state is asking for the equivalent of $3.3 million for the most prominent property, the Medea sanatorium. This price tag includes a mandatory commitment to spend an additional $24 million over five years. The renovation plan must result in at least 120 guest rooms, conference halls, and restaurants. The other nine properties have starting bids between $1 million and $3.5 million, with similar requirements for further investment in repairs.

Frederic Le Fichoux, a commercial real estate expert who contributed to a 2020 feasibility study, argues that the terms address a structural issue. He notes that fixing one building does not fix the surrounding town. "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." He believes the area needs public funding for infrastructure like roads to support private building investments.

The state has attempted to sell these assets before with mixed results. Seven sanatoriums were sold in previous auctions, but three have since reverted to state ownership. Medea was taken back in 2024 after its buyer failed to meet contractual obligations. This history of failed private ownership adds risk to the current bidding process.

David Sichinava, an academic based in Canada, describes the redevelopment challenge as an "all or nothing" scenario. He points out that Tskaltubo is exempt from casino permit fees that can cost up to $1.9 million annually elsewhere in Georgia. "Balneology (the science of therapeutic use of baths) alone can't really support the kind of tourists that this town can host," he said. He suggests the town relies heavily on gambling revenue to attract visitors.

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

The buildings also served as temporary housing for people displaced by conflicts in Abkhazia and South Ossetia. Most residents have moved out, but Sichinava estimates 100 to 200 displaced people still live in the structures. Madonna Mushkudiani, who moved into one in 1992 and was relocated in 2023, said the group still visits. "We miss every minute we spent there. It was our second home," she said.