Tskaltubo Spas Carry Heavy Debt

The Georgian government listed ten dilapidated sanatoriums in Tskaltubo for sale on October 20, but the entry price is only the beginning. Bidders must agree to extensive renovation mandates that dwarf the purchase cost, a condition that has drawn scrutiny from commercial real estate analysts. The online auction closes on November 15.

The most prominent property is the Medea sanatorium, recognizable for its neoclassical arches. Tbilisi is asking for the equivalent of $3.3 million for the building. However, the buyer must commit an additional $24 million over five years to complete renovations. This work must result in at least 120 guest rooms, conference halls, and restaurants. The total financial commitment for Medea reaches $27.3 million. The other nine properties in the auction carry starting prices between $1 million and $3.5 million, with similar investment pledges attached.

Frederic Le Fichoux, a commercial real estate expert who contributed to a 2020 feasibility study on the town, argued that the requirements highlight a structural issue. He noted that renovating a single building does not fix the wider infrastructure. Le Fichoux told RFE/RL, "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 believes the town needs public funding for roads and access to support private reinvestment.

The state has attempted to sell these properties before with mixed results. Seven sanatoriums were sold in previous auctions, but three have since reverted to state ownership. Medea was one of them, taken back in 2024 after its previous buyer failed to meet contractual obligations.

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

The properties have a complex recent history. In October 2019, Bidzina Ivanishvili, founder of the ruling Georgian Dream party, promised to buy the spas and undertake a "full-scale rehabilitation." Prime Minister Irakli Kobakhidze said on October 20 that the pandemic and "de facto sanctions" against Ivanishvili caused the plan to be dropped. The buildings also housed residents displaced by the conflicts in Abkhazia and South Ossetia. Madonna Mushkudiani, who fled Abkhazia in 1992 and lived in one of the complexes until 2023, said, "We miss every minute we spent there. It was our second home." Sichinava estimates that 100 to 200 displaced residents still live in the structures.