Land-rush revolution: US-Cuba talks shake up island’s real estate market
In just a few short years, Cuba’s non-existent real estate sector has boomed into a multifaceted, sometimes frenetic industry
When the communist island began allowing citizens to buy and sell their homes almost four years ago, it was a godsend for Nieves Puig Macias.
The 56-year-old retired architect is suffering from an array of health problems — from bad kidneys to a bum arm — that make it hard for her to get around her three-story home. She’s been hoping to sell it and move into a ground-level dwelling.
But two years later, she says she has a new problem: greedy real estate agents who are so keen on turning a profit that her house has languished, overpriced, on the market.
In just a few short years, Cuba’s non-existent real estate sector has boomed into a multifaceted, sometimes frenetic industry: Hand-scrawled “Se Vende” signs hang off dilapidated colonial structures and modern condos, there are real estate magazines and agents, and almost a dozen homebuying websites have sprung up despite the island’s extremely limited internet access.
Puig says her five-bedroom, five-bathroom home would sell for US$55,000. But agents keep trying to slap an additional US$5,000 to US$10,000 onto the price tag.
“There are people who are interested in buying it, but the intermediaries want to earn too much money,” she said. “And it makes me so angry — I won’t let them.”
If the rebirth of Cuba’s real estate industry has brought with it free-market woes, those issues are likely to get worse in coming years.
As the US and Cuba continue their slow-dance toward rapprochement, it has fueled American fantasies of seaside Caribbean homes on the cheap, and Cuban dreams of deep-pocketed buyers rushing across the Florida Straits.
A combination of strict laws on both sides, however, is keeping that from being a reality.
For starters, the US embargo makes it illegal for Americans to invest on the island.
And while Cubans and foreign permanent residents can buy and sell freely, those who live abroad are relegated to a few tightly controlled housing enclaves that aren’t particularly a bargain.
Even so, some are already jockeying to be on the front lines of an eventual land rush, buying property under the names of eligible family and friends. Such under-the-table sales have been going on since the 1990s, but accelerated after real estate sales were legalised and now with the anticipation of a new relationship with the United States.
“A lot of people, without any hesitations, without any analysis or knowledge of the market, are rushing in to buy real estate in Cuba under the assumption that the Americans will soon come and the prices will double or triple,” said Hugo Cancio, a Cuban-born entrepreneur who earlier this year announced the launch of the quarterly OnCuba Real Estate magazine in South Florida.
Combine that with Cuban exiles who want to return and “you now have an emerging market where the prices are not proportionate to reality”, he said.
In the two-tiered system, most bargains are illusory. While Puig’s US$55,000 home might be a steal in South Florida, it is out of reach for most island-bound Cubans earning pesos. And the tight supply of homes legally available to foreign residents means they draw premium prices. A four-bedroom four-bathroom penthouse in a tony part of Havana, for example, is being listed for US$1.2 million. More modestly, a one bedroom apartment on Miramar beach is going for US$435,000.
In a country where two or three generations of families often live in a cramped space, however, there’s buzz around the new opportunities.
In the chapel of Our Lady of Lourdes, at the La Merced church in Old Havana, Cubans have tucked little home-made houses — some with picket fences or model cars in their garages — in the niches of the grotto in the hopes of scoring a house. It is our Lady of Loreto who is associated with homes, but for Cubans Our Lady of Lourdes is close enough.
“Oh look, this one has a hinged door,” Reverand Gilbert Walker, La Merced’s rector, said as he inspected the display. “What we have here is an interesting example of popular religious expression. But the number of houses placed here has certainly increased after real estate sales became legal. The new law opened a whole market that was waiting to explode,” he said.
Many of the miniature homes are charming, but sometimes buying and selling real estate is anything but. Whether to sell a house that has been in the family for generations, or to keep it as the ancestral home, can be a source of friction.
One of the messages stuffed in the grotto alludes to the tension. “Please allow my brother to acquire rights over the home that is in a legal dispute with his sister-in-law and grant him much happiness in his home,” it reads.
Another plaque gives thanks to the virgin for “granting me the miracle” of a home.
Sandra Arias, 35, was a foreign language professor until she caught the real estate bug. Her fluent English landed her a job with an agency, but business was good enough that she struck out on her own a few months ago.
While many of her buyers are local, or returnees, her specialty is working with foreigners, primarily Canadians, French and Russians. And the announcement of formal US-Cuba talks has been good for business.
“Since January, we’ve seen a big jump, a lot more clients in Havana, where most of the movement is,” she said.
Increasingly, her competition is not other agents but the proliferation of websites.
“When people start looking for houses they go to the internet first,” she said. “That’s my competition, so I have to use Instagram and Twitter to get the word out about my properties.”
For many Miami-based Cuban-Americans who lost homes and businesses during the Cuban Revolution, the thought of a thriving real estate market is anathema. Many say they don’t need to look for property in Cuba, they just want theirs back.
Jose Fernandez’s family fled Cuba to Miami when he was 5. Now 59, Fernandez has been in the commercial real estate industry for 40 years. And while he’s sensitive to the concerns of old-timers, he’s also interested in playing a role in the new Cuba.
He’s travelled to the island six times in the last two years to visit family and scout for opportunities. But the prospect of buying a house under someone else’s name — even a close relative — is a recipe for heartburn, he said.
“How many times has a cousin told another cousin ‘I’m going to give you the money right back?’” he said. “Unless you are willing to let them keep the house, it’s not a good idea.”
There are also obstacles to turning a profit: Cubans are only allowed to own two homes, there is no financing and no foreclosure laws, and the government itself has said it will not allow property speculation.
“There are a lot of ways to make money in Miami; we don’t have to go to Cuba to make money,” Fernandez said. “I just want to be part of the changes that are going on.”
There might also be risks for those who dive in too early.
The decayed charm of a pre-Revolution apartment might be seen in a different light if, for example, the Related Group begins building modern condos on a nearby lot, Cancio said.
“What happens to the price of that building right next door [to the new construction] from 1947 that has issues with getting the water to the ninth floor and has no parking?” he asked.
As for Puig, she said she’s given up on agents. When she feels well enough, she’ll walk down the street to an internet cafe and list her home on any number of websites. Her neighborhood, Los Sueños or, roughly, The Dreams, is close to the Moncada Barracks — the birthplace of the Cuban Revolution — and it gets a pleasant breeze, she said.
“I know how much it’s worth,” she said of her home. “This is one of the best neighbourhoods in the city.”