Georgia demands $27.3 million for Soviet spa complex sale

Buyers seeking to purchase historic Soviet-era buildings in Georgia must now prepare for costs that far exceed the purchase price. The government has listed ten abandoned sanatoriums in the spa town of Tskaltubo for sale, with an online auction closing on November 15. The state is asking for the equivalent of $3.3 million for the most famous property, the Medea sanatorium. However, the buyer must also commit to spending an additional $24 million over five years to renovate the site.

The renovation mandate is strict. The winner of the Medea bid must deliver at least 120 guest rooms, conference halls, and restaurants. The other nine properties in the auction carry similar conditions. Their starting prices range from $1 million to $3.5 million, with requirements to invest considerably more in repairs. The government listed the properties on October 20.

Tskaltubo was a popular holiday destination during the Soviet era, accessible by direct train from Moscow. Visitors came for baths in warm, mildly radioactive mineral water. The Medea building, with its neoclassical arches, has become a recognizable symbol of the region's decay in international media.

Frederic Le Fichoux, a commercial real estate expert who helped prepare a 2020 feasibility study on the town, warned that restoring single buildings may not be enough. He noted that the rest of the destination remains in a state of disrepair. "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 the town needs public investment in infrastructure like roads to support private reinvestment.

The state has struggled to maintain private sales in the past. Seven sanatoriums were sold in earlier auctions, but three have returned to state ownership. Medea was taken back in 2024 after its buyer failed to meet contractual obligations. David Sichinava, a Canada-based academic who grew up in the town, described the redevelopment approach as "all or nothing." He noted that Tskaltubo is exempt from permit fees for casino operators, a privilege that can save operators up to $1.9 million annually compared to other parts of the country.

The town gained international attention in October 2019 when Bidzina Ivanishvili, Georgia's wealthiest man, 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 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 have moved out, but Sichinava estimates 100 to 200 displaced people still live in the structures. Madonna Mushkudiani moved into one building in 1992 and was relocated to an apartment in 2023. She said the conditions were poor, but she still visits former neighbors. "We miss every minute we spent there. It was our second home," she said.