Medea sanatorium sale requires buyer to spend $27.3 million total

The Georgian government has launched a public sale for ten derelict sanatoriums in the Tskaltubo spa town, with the online auction set to close on November 15. The listing went live on October 20, placing properties with a combined minimum valuation of approximately $27.3 million back on the market.

The most prominent asset is the Medea sanatorium, which the state has priced at the equivalent of $3.3 million. However, the purchase price is only a fraction of the total financial commitment. A buyer of Medea must pledge an additional $24 million for a five-year renovation plan. This capital injection is required to create at least 120 guest rooms, conference halls, and dining facilities. The remaining nine properties carry similar stipulations, with starting bids ranging from $1 million to $3.5 million.

Frederic Le Fichoux, a commercial real estate consultant who contributed to a 2020 feasibility study for the town, noted that the auction terms address a structural gap in the local infrastructure. He argued that renovating a single building is insufficient if the surrounding area remains neglected. Le Fichoux stated, "If you are one investor and you buy, you renovate that property that you bought, you turn it around, but then the rest of the destination is still kept as a ruin." He emphasized that public funding for roads and access is necessary to support private reinvestment.

The state has previously attempted to sell these assets, with success limited by buyer performance. Seven sanatoriums were sold in earlier auctions, but three have since reverted to state ownership. Medea was among those reclaimed, with the government taking it back in 2024 after the previous buyer failed to meet contractual obligations.

David Sichinava, a Canada-based academic who grew up in Tskaltubo, described the redevelopment challenge as binary. He pointed to a specific legal provision that exempts Tskaltubo from casino permit fees, a cost that can reach $1.9 million annually in other parts of Georgia. Sichinava suggested that therapeutic bathing alone may not attract enough tourists to sustain the town without gambling revenue. He commented, "Balneology (the science of therapeutic use of baths) alone can't really support the kind of tourists that this town can host."

The current auction follows a high-profile promise made in October 2019 by Bidzina Ivanishvili, founder of the ruling Georgian Dream party. Ivanishvili pledged to buy the state-owned spas and conduct a "full-scale rehabilitation" after calling their condition "depressing." Prime Minister Irakli Kobakhidze explained on October 20 that the plan was abandoned due to the pandemic and what he termed "de facto sanctions" against Ivanishvili.

Since the 1990s, the sanatoriums have also served as housing for people displaced by conflicts in Abkhazia and South Ossetia. Most residents have moved out, though Sichinava estimates between 100 and 200 displaced individuals still live in the buildings. Madonna Mushkudiani, who fled Abkhazia in 1992 and moved to a town apartment in 2023, said she still visits her former neighbors. She described the buildings as their second home, noting, "We miss every minute we spent there."