HAVANA — A few hours
and a mojito or two after arriving in this 500-year-old city, with its ocean
vistas and dazzling architecture, American visitors often ask: Can I buy a
piece of this?
They cannot. The Cuban
government doesn’t allow it. The U.S. government doesn’t allow it.
Not yet, at least.
But with the two
countries moving to restore diplomatic relations and end decades of
estrangement, it is not difficult to imagine a day when pent-up global market
forces will wash over this city’s sagging buildings and mansions in distress.
Cubans are already angling to get ahead of the flood.
Three years after Raúl
Castro cast aside decades of communist housing dogma and allowed homeowners to
buy and sell their properties for the first time since the 1960s, the island’s
real estate market is proving to be a powerful engine of economic and social
change.
A cat peeks its head from a door of an ocean
front antique house that faces The Malecon. (Sarah L. Voisin/The Washington
Post)
On seemingly every
Havana street, contractors are mixing cement, fixing cracks and giving
makeovers to moldy facades that haven’t seen paint since the Brezhnev era. New
bathroom fixtures arrive in couriers’ suitcases from the Home Depot aisles of
South Florida. Havana’s skilled electricians and plumbers earn more in a day
than a doctor makes in a month.
“It isn’t only the
ability to buy property,” said Magda Mora, 39, who returned to Havana in 2012
after 14 years in Italy and Miami. “It’s buying property that can be used for a
business.”
Mora bought a
3,300-square-foot duplex in the heart of the city’s Vedado neighborhood,
renovated it and now lives upstairs with her family, converting the lower unit
into a mini-hostel. It has five rooms that rent for $35 a night each, earning
good reviews on TripAdvisor.
Anyone who has driven
around Havana has seen that a tremendous amount of wealth was invested in
stone, marble and mahogany in the years between Cuba’s founding as a republic
in 1902 and Fidel Castro’s takeover in 1959. Few cities in the Americas can
compare.
Wealthy and middle-class
Cuban families who fled for the United States saw their homes expropriated by
the government. Many went to poorer Cubans or the caretakers that the wealthier
families had left behind. The city’s exclusive neighborhoods became racially
mixed, and Havana became a much more “heterogeneous city,” according to
architect and city historian Miguel Coyula.
Today, many of those
families are selling, finding themselves suddenly in possession of a valuable
asset. But that trend appears to be re-gentrifying the city along racial lines
and class divisions, particularly because lighter-skinned Cubans are more
likely to have relatives abroad with money to invest.
Castro’s 1960 housing
reform led to a ban on property sales and a decree that no Cuban could possess
more than one urban dwelling, while converting hundreds of thousands of renters
into owners — albeit owners who couldn’t sell.
Although Cubans were
allowed to “swap” houses in deals that often involved under-the-
table cash, the lack of
a formal market, along with government restrictions on private home
construction, worsened a shortage.
The problem is
exacerbated by a supply crunch as the Cuban government consistently falls short
of its housing-construction goals. More than 130,000 city residents are living
in shelters or substandard housing, according to government data. Migrants from
poorer eastern Cuba settle in shantytowns on the city’s edge or crowd into
crumbling urban tenements that the real estate boomlet has yet to reach.
Meanwhile, elderly
Cubans whose children left the island remained in large homes they couldn’t
afford to maintain.
“There were thousands
of homes sitting vacant or half-empty,” Coyula said.
Ways around the rules
Market forces are now
fixing such absurdities, brokers say, allowing older Cubans to easily downsize
and get the cash they need to live on, while new investors are transforming
tattered properties into boutique hotels before an American tourist surge hits.
Significant
restrictions remain. Cubans are limited to one property in the city and one
vacation home. Titleholders must be Cuban citizens or permanent residents, not
foreigners. The deals are almost always done in cash, and the transactions must
pass through Cuban banks, though buyers and sellers often agree to exchange additional
sums outside the country to minimize tax payments.
Communist authorities
are in the game, too, building high-end condominiums for sale to non-Cuban
buyers, with plans to erect more alongside golf courses and yacht marinas in
partnership with Chinese investors.
As usual, Cubans have
found ways to skirt their government’s attempts to control the market, as have
Cuban Americans (and U.S. residents) blocked by the U.S. trade embargo. Some
buyers acquire additional properties in the names of their children, while
foreigners find Cubans to put on the deed, despite the risk that they would
have no legal claim to the property.
At a deeper level, Raúl
Castro’s limited real estate liberalization has brought a sea change in Cubans’
regard for their homes, transforming them from yet another domain of state
control into a tangible asset whose value needs to be preserved, if not
improved.
The reform is even
altering the relationship between local government officials and Cuban property
owners, who are no longer passive about broken sewer pipes, uncollected garbage
and perpetually neglected city parks.
“People see that the
value of their homes is related to their surroundings,” said Nery Galindo, who
obtained a license as a private real estate broker as soon as the government
legalized the trade in 2013.
Her company, Espacio
Cuba, has two offices in Havana and a Web site in Spanish and English with
photo galleries and a database of properties listed for as much as $650,000.
Similar sites have
advertised 1940s- and '50s-era mansions for more than $1 million. The phrase
“capitalist construction,” referring to properties built prior to Fidel
Castro’s revolution, is used as shorthand for “quality.”
Most of the listings
are in Havana’s most desirable districts, especially Vedado and Playa. A
typical three-bedroom, two-bath apartment in those neighborhoods sells for
about $60,000, while detached houses there are often listed for $100,000 or
more.
That’s a fortune in a
country where the average government salary is stuck at $20 a month. But those
Cuban workers aren’t the target demographic, unless they’re the ones selling.
With salaries that low, many of them are — especially if they live in Havana’s
more coveted districts.
Mora, the mini-hostel
owner, said the family that sold her their house used the money to buy a
Russian Lada sedan and two smaller apartments in a less central part of the
city. “Their son uses the Lada as a taxi,” she said. “So it worked out well for
everyone.”
Overseas money
It’s no secret that
much of the money flowing into the Cuban market comes from outside, especially
Europe and the United States.
Galindo said inquiries
through her site have doubled since President Obama and Raúl Castro announced
plans in December to restore relations. The biggest spike is from Cubans in the
United States who have relatives on the island able to occupy the properties or
manage them as rental units.
A surge in tourism this
year has left the city with an acute shortage of hotel rooms, and millions of
American visitors are expected in the next several years if Congress approves
legislation to lift travel restrictions. Apartments in the city’s most
desirable neighborhoods are quickly being converted into rentals, spurred by
the recent arrival of companies such as Airbnb that allow Americans to book
rooms online.
Brokers say many of the
new buyers are Cubans who, like Mora, left the island and want to regain a
foothold or secure a cheap place to retire. This appears to have the indirect
political consequence of making them stakeholders who prefer a gradual
evolution in Cuba rather than an upheaval that would hurt their investment.
“The number of serious
buyers has increased significantly on hopes for change after the [Dec. 17]
speeches by Obama and Castro,” said Milly Diaz, owner of Cuba Homes Direct,
another start-up real estate agency. She returned to the island after working
for several years as a broker in England. She said prices were all over the map
when the market first opened up in 2011.
“The market is still
immature, but there’s a bit more experience now, and sellers are more and more
willing to negotiate,” she said.
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