Cuba’s real estate market heats up
40,000 cash-rich expats return home
HAVANA: In shorts and wearing shoes but no socks, Mauricio Garcia could pass for a tourist as he strolls around Old Havana. But he’s as Cuban as a Cohiba cigar, and his return after 16 years abroad is part of the demographic behind communist-run Cuba’s emerging real estate market.
An estimated 40,000 Cubans like him have returned from abroad since 2013, lured home by government migration reform that made it easier for expat Cubans to come home and buy property.
Once derided as the lowest of low “worms” for having left Cuba, now — flush with cash — they are being welcomed home with open arms as “mariposas,” or butterflies, by the cash-strapped government. Garcia made the move home in 2016. “The decision was down to the fact that you are allowed to do business. And instead of mooching around the world, it’s better to be here, in your own country,” said the 41-year old, who owns a tourist restaurant near the port.
Garcia has been able to take advantage of another reform in 2011 which authorises only Cubans to buy and sell real estate. Previously, they alone were allowed only to exchange property.
“Real estate sales took off for a country of just 11 million with a state-led economy: 45,000 in 2012, 88,000 in 2013 and 100,000 in 2014, before falling back slightly in 2015,’’ said planning official Carlos Garcia Pleyan, a Spaniard from Catalonia who has spent over half a century in Cuba.
The market remains “very active” however, according to property specialist Armando Portela, in an interview with Miami-based Cuban magazine Cuba Geografica despite having to “overcome many setbacks, such as weak access to technology, the lack of public information ... financial tools, legislative delays.”
Havana, with its colourful buildings and old world charm, will celebrate its quincentenary in 2019, and the government of President Miguel Diaz-Canel is trying to make up a shortfall of some 700,000 housing units in the city, by boosting construction from the current 20,000 to 50,000 units a year.
It’s a tall order when the obstacles against the government are not just financial.
Cuba’s location in the Caribbean places it directly in the path of destructive weather patterns. Hurricane Irma destroyed 30,000 dwellings in one night in Sepember 2017.
Meanwhile, returning Cubans are buying and renovating old buildings to make restaurants or tourist apartments, and money, out of them.
It’s exactly what 35-year-old translator Maykel Galindo did. After living in Belgium for 16 years, he used his European savings to buy a 150-square-metre ruin in Havana’s historic old quarter.
With his family’s help, he renovated the building and divided it into rooms to let.
“I discovered that inside Cuba there exists another Cuba, which has been created to a certain extent by the private sector,” said Galindo. “And I, as a Cuban, found that this side of Cuba was the one I wanted to be on.”
He remembered that at the time he bought the house in 2015, “prices were ridiculously low” since when they have skyrocketed eightfold.
Prices at the moment run from $5,000 for small apartments on the edge of the city to a million dollars, in upmarket residential areas like Kholy, Miramar or Vedado.
The sellers are generally owners of big houses who want to downsize and need money, whether to leave Cuba or invest in a business.
The buyers are often returning Cubans or people with family living abroad, or others who want to start their own business. The law prevents foreigners from buying in Cuba, but people married to Cubans are able to circumvent the restrictions.
Real estate advertising goes through the internet, through small real estate agencies or directly on the street. The most soughtafter houses are those built before the 1959 Revolution, presented by agents here as capitalist-built — a guarantee of quality according to the sellers.
The real estate market however faces a rough patch ahead, with new government restrictions hitting the fledgling private sector in December.
“And the US trade embargo under President Donald Trump has put a dent in toruism potential and investors’ interest in the real estate market,” said Garcia Pleyan.
“But, in the long run, the potential is huge and will go up again,” he said, adding that Cuba’s real estate sector could ultimately open up to foreign capital, even if that would risk fueling soaring prices.