From the NYT
February 15, 2012
Cuba Unleashes the Pent-Up Energy of Real Estate Dreams
By VICTORIA BURNETT
HAVANA — As fixer-uppers go, Carmen Martínez’s derelict shotgun house is no cakewalk. The living-room roof collapsed 15 years ago, and the porch soon followed suit, leaving two teetering columns with nothing to hold up. The bathroom is a squalid privy, and the kitchen consists of a sink with no taps and two oil drums full of water.
But roofs — even half-missing ones — are a hot commodity these days in Havana, which has been swept by a bout of real estate fever. So Yoél Bacallao, a 35-year-old entrepreneur, offered to repair Ms. Martínez’s dilapidated house for free on one condition: that she let him build an apartment of his own on top of it.
“It was as if a ray of light had come down from the sky,” said Ms. Martínez, 41, who would hang laundry in the roofless living room and sweep furiously during rainstorms to keep the rest of the house from flooding. “I have been watching this house fall apart around me for years.”
All over the capital and in many provincial towns, Cubans are beginning to inject money into the island’s ragged real estate, spurred by government measures to stimulate construction and a new law that allows them to trade property for the first time in 50 years.
The measures are President Raúl Castro’s biggest maneuver yet as he strives to get capital flowing on the island, encourage private enterprise and take pressure off the economically crippled state.
For decades, the government banned real estate sales and kept a jealous grip on construction. Materials were scarce, red tape endless and inspectors meddlesome. Black marketeers would deliver cinder blocks by cover of darkness, and purchasing a bag of sand was a furtive process akin to buying drugs.
But during the past two months the state has reduced paperwork, stocked construction stores, legalized private contractors and begun offering homeowners subsidies and credits.
On many streets, the chip of hammers and gritty slosh of cement mixing rises above the sparse traffic as Cubans paint facades, build extensions or gut old houses. Still, it is generally small-scale stuff: Mr. Bacallao, who has savings from his business repairing mobile phones, expects to spend about $10,000 on his project.
“Before, you had to sneak a bag of cement here, a bag of cement there,” he said. Mr. Bacallao, who rents a tiny apartment with his girlfriend, built a rooftop house three years ago, but the state confiscated it because he could not explain how he came by the materials. If this house works out, he will move his daughters to Havana from the provinces.
“Now I can explain where I got the materials,” he said. “I can explain where I got the money. No problem.”
Behind scruffy porticos and walls of bougainvillea, the wheels of the property trade are turning. Unofficial brokers — who are still outlawed in Cuba — say they have never been so busy, trawling the streets and the Internet for leads and fielding calls from prospective buyers.
Cubisima, an online classified service, said the number of hits on its real estate page tripled to an average of 900 per day after the new property law took effect on Nov. 10. The law allows Cubans to buy and sell their houses, and even own a second home outside the cities, though it still bars most foreigners from buying.
It is a crude market, where househunters rely on word of mouth and prices are based as much on excitement as on any clear sense of property values, according to interviews with homeowners, brokers and experts. Buyers, who at the top end are mainly Cuban émigrés and Cubans married to foreigners, often declare a fraction of what they pay, and money sometimes changes hands overseas, suggesting that the government’s hope of reaping significant tax revenues may be at least partly thwarted.
On a recent day, a stylish flight attendant showed a viewer around the pretty three-bedroom home she hopes will fetch $150,000; a mile away, an elderly widow held out for an offer of $500,000 for her big, unkempt 1950s house — to be deposited in Spain, please.
Many sellers plan to downsize, so they can live better or leave. Victoria Pérez, a retired doctor, put her spacious house and two-bedroom annex on sale last month for $80,000. She hopes to buy something smaller and put aside about $20,000 to live on and visit her daughter in the United States.
“To earn $20,000 would take 20 years,” she said. “This opens up a whole world of opportunities.”
Statistics are few, and brokers admit that the curious outnumber the serious. The National Housing Institute processed just 364 sales in the three weeks after the new law took effect.
“Prices are very inflated,” complained a Cuban-Canadian who was viewing a mint-colored four-bedroom house priced at $240,000 one recent afternoon. He said he would watch the market for a month or two to see how things shook out.
Steep price tags notwithstanding, experts and brokers say there are signs that the better-off are starting to migrate to areas like Miramar, Havana’s embassy district, and build vacation homes on the coast.
“There is definitely a rearrangement going on,” said Carlos García Pleyan, a sociologist who worked for decades for the Cuban government’s urban planning department.
Other than Cuban émigrés, he said, the gentrifiers were “the winners of the Cuba of recent years.”
“People who have made money legally, and people who have made money illegally,” he said. “Businesspeople, maybe a restaurant owner, maybe someone who owns taxis, maybe someone who has made money through corruption.”
“We shouldn’t be worrying so much about how people rearrange themselves,” he added. “We should be asking ourselves how such large social inequalities have happened.”
While the new market dynamics helped Ms. Martínez, some worry they will do little to solve the housing problems faced by many Cubans, whose wallets would not stretch even to buy a $3,000 one-bedroom apartment.
“It’s all very well for those who have money or who have a relative abroad; but if not, forget it,” said Luis Martínez, a construction worker (who is not related to Carmen). “My son is 18. The only way he’ll ever leave home is if he marries a girl who has a house.”
If anyone needed a reminder of Cuba’s critical housing problem, they got one in January, when a building collapsed in central Havana, killing four people. Miguel Coyula, an architect who specializes in urban planning, said an average of three buildings collapsed in Havana each day, victims of neglect, overcrowding and improvised construction. Well over 100,000 people are waiting to move to government hostels.
Mr. Pleyan estimated that it would cost about $3.6 billion to build the 600,000 houses Cuba needs, according to the government. Independent estimates are more than double that. The creation of construction and housing cooperatives is one step being discussed: such arrangements would reduce building costs and allow groups of individuals to build, say, a small apartment block.
But Mr. Pleyan said Cuba would also have to open wider to foreign investment and look for models that would balance public interests and private profit, by, for example, encouraging developers to build local infrastructure.
Such projects will not happen quickly — if at all — and Ms. Martínez feels lucky that she salvaged her home before she and her family had to abandon it. Once the roof is on, she said, she would like to get running water in her kitchen, replace the toilet and finish building a bedroom for her teenage son.
“I need taps, doors, windows, tiles; everything needs fixing,” she said, looking at the stained walls and rotten shutters of her bedroom.
“Little by little,” she added. “Little by little.”
Read the story and see photos HERE.