Georgia Sets $27.3 Million Total Obligation for Medea Spa Sale

The Georgian government has listed ten dilapidated Soviet-era sanatoriums in the resort town of Tskaltubo for auction. The online bidding process begins with the properties going live on October 20 and will close on November 15. The sale terms require buyers to fund extensive construction work in addition to the purchase price.

The most prominent asset in the auction is the Medea sanatorium, a neoclassical structure often featured in international media. Tbilisi has set the entry price for this property at the equivalent of $3.3 million. However, the successful bidder must also pledge an additional $24 million toward a five-year renovation plan. This investment must result in at least 120 guest rooms, conference facilities, and restaurants. The other nine properties in the auction carry similar requirements, with starting bids ranging from $1 million to $3.5 million.

Frederic Le Fichoux, a commercial real estate expert who helped draft a 2020 feasibility study for the town, argues that the financial burden on a single buyer creates a structural risk. He noted that renovating one building does not automatically fix the surrounding area. "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 believes public funding for infrastructure like roads is necessary to support private investment in the hotels.

Past sales have faced obstacles. Seven sanatoriums were sold in previous auctions, but three have since reverted to state ownership. Medea itself was taken back in 2024 after its buyer failed to meet unspecified contractual obligations. This history adds a layer of caution to the current bidding process.

David Sichinava, a Canada-based academic who grew up in Tskaltubo, described the redevelopment strategy as an "all or nothing" gamble. He pointed out that the town is exempt from permit fees for casino operators, a perk that can save businesses up to $1.9 million a year compared to the rest 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 national attention in October 2019 when Bidzina Ivanishvili, Georgia’s wealthiest man, promised to buy and rehabilitate the state-owned spas. He called their condition "depressing" but never completed the plan. Prime Minister Irakli Kobakhidze stated on October 20 that the pandemic and "de facto sanctions" against Ivanishvili caused the project to be dropped.

Since the 1990s, the buildings have also served as housing for people displaced by the conflicts in Abkhazia and South Ossetia. Most residents have moved out, and Sichinava estimates between 100 and 200 displaced people still live in the structures. Madonna Mushkudiani, who fled Abkhazia in 1992 and moved into one of the buildings, was relocated to an apartment in 2023. "We miss every minute we spent there. It was our second home," she said.