The Booming Havana Real Estate Market

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.

Aña La MAGIA del TAMBOR (1994 Cuban documentary)

Story on New Housing Regulations in Cuba

Cuba legalizes sale, purchase of real estate
Much-despised ban on these transactions took effect in stages over the first years after Fidel Castro came to power in 1959
MSNBC

By PAUL HAVEN
HAVANA — For the first time in a half-century, Cubans will be allowed to buy and sell real estate openly, bequeath property to relatives without restriction and avoid forfeiting their homes if they abandon the country.

The highly anticipated new rules instantly transform islanders' cramped, dilapidated homes into potential liquid assets in the most significant reform yet adopted by President Raul Castro since he took over the communist country from his brother in 2008.

But plenty of restrictions remain.

Cuban exiles continue to be barred from owning property on the island, though they can presumably help relatives make purchases by sending money. And foreigners can also hold off on dreams of acquiring a pied-a-terre under the Caribbean sun, since only citizens and permanent residents are eligible.

The law, which takes effect Nov. 10, limits Cubans to owning one home in the city and another in the country, an effort to prevent speculative buying and the accumulation of large real estate holdings. While few Cubans have the money to start a real estate empire, many city dwellers have struggled over the years to maintain title to family homes in the countryside, and the new law legalizes the practice.

The change follows October's legalization of buying and selling cars, though with restrictions that still make it hard for ordinary Cubans to buy new vehicles. The government has also allowed citizens to go into business for themselves in a number of approved jobs — everything from party clowns to food vendors and accountants — and permitted them to rent out rooms and cars.

While Castro has stressed that there will be no departure from Cuba's socialist model, he has also pledged to streamline the state-dominated economy by eliminating hundreds of thousands of state jobs and ending generous subsidies the state can no longer afford.

Cuba's government employs about 80 percent of the workforce, paying wages of just $20 a month in return for free education and health care, and nearly free housing, transportation and basic foods.

Economists and Cuba experts say the new property law will have a profound impact on people's lives, though probably will not be enough by itself to transform the island's limping economy.
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Read the full post HERE.

Viva la evolucion (Cuban private market story)

Globe and Mail

Capitalism
In Cuba, it's Viva la evolucion!
sonia verma
HAVANA— From Thursday's Globe and Mail
Published Wednesday, Oct. 12, 2011 8:42PM EDT
Last updated Wednesday, Oct. 12, 2011 9:49PM EDT

Barbershops, beauty salons, restaurants and car washes have sprung up across Cuba in the year since the Communist Party allowed citizens to open small, private businesses in an effort to save the country from ruin.

The government says more than 157,000 people have qualified for business permits and are currently self-employed. This new generation of Cuban entrepreneurs is quietly reshaping the island’s stagnant revolution in a way that was inconceivable when Fidel Castro was in control. The economic changes brought about by his brother Raul, however, are proving slow to take hold.

Many are being implemented by young Cubans with virtually no memory of life before communism. Some new entrepreneurs are struggling to understand how to pay small-business taxes or navigate the country’s labyrinthine bureaucracy. With virtually no access to bank loans or credit, most are relying on family living abroad to float their new ventures.

Still, Cuba is buzzing with new energy as people attempt, for the first time in their lives, to make money outside of the underground economy. Business owners are experimenting with novel concepts, such as advertising and open competition. It’s unclear, however, how far the Cuban authorities will allow the reforms to go – whether small business owners will be permitted to accumulate vast amounts of wealth, for example, or build empires.

At the moment, however, these new entrepreneurs seem content enough to turn a profit they can officially pocket.

Read the four profiles HERE.

Al Jazeera English story on Cuba

NYT: The Stomachs of Strongmen

NYT August 20, 2011 The Stomachs of Strongmen By ANN LOUISE BARDACH Ann Louise Bardach is a writer at large for Newsweek and the author of “Without Fidel: A Death Foretold in Miami, Havana and Washington.” Santa Barbara, Calif. THE tribute concert Aug. 12 for Fidel Castro’s 85th birthday, at the Karl Marx Theater in Havana, was billed as the Serenata de la Fidelidad (the Serenade to Fidelity). In terms of flat-footed plays on the name of Cuba’s maximum leader, I prefer “The Fideliad” — which speaks to his epic, exhausting and endless run, which began in 1959. Some 5,000 concertgoers turned out for the homage by 22 singers, including Omara Portuondo of the Buena Vista Social Club, but the guest of honor was not present. Instead, he settled for a quiet celebration with family, his 80-year-old brother and presidential successor, Raúl, and his devoted disciple, President Hugo Chávez of Venezuela. The irrepressible Mr. Chávez broke the news on Twitter late Saturday: “Here with Fidel, celebrating his 85th birthday! Viva Fidel!” Over the last decade, the two leaders have celebrated quite a few birthdays together. For his 75th in 2001, Mr. Castro trooped to Caracas for a bash with Mr. Chávez, who hosted a Champagne gala, followed by a nautical tour of Venezuela’s rainforests. The visit, Mr. Chávez said, “gives us an opportunity to let him know how much we love him.” It’s unclear how many birthdays are left for either leader. Both are now facing their greatest challenges yet, not from opposition movements or dissidents, but from their own failing bodies. Mr. Castro nearly died in 2006 during a botched colon surgery to treat a pernicious case of chronic diverticulitis. He passed his 80th birthday lying in a hospital bed, connected to an antibiotic and nutrient drip. Sitting beside him was Hugo Chávez, who has been there at every stage of Mr. Castro’s five-year convalescence, casually jetting into Havana as if it were a stroll around the block. Now the 57-year-old Venezuelan is fighting for his own life, after a baseball-size tumor was removed from his abdomen in Havana’s top hospital in June. It was Fidel Castro, not an oncologist, surgeon or family member, who delivered the bad news to Mr. Chávez post-surgery, and who outlined his prognosis and treatment — along with his usual tips on public relations and political strategies. It is likely, based on his surgeries, symptoms and treatment, that Mr. Chávez has metastasized colorectal cancer. After surgery and radiation, he is probably undergoing at least six months of chemotherapy, again in Havana, where he just finished his second round. As it turned out, Mr. Castro spent much of his birthday giving his friend a pep talk. “We spoke about everything,” Mr. Chávez related upon his return to Caracas. “He said to me: Chávez, ‘You yourself can begin to convince yourself that everything’s over. ... No, no, it’s not over.’ ” Ironically, the hemisphere’s most indomitable strongmen and determined foes of the United States and free market economics have both been felled, at least for now, by abdominal woes — their guts, as it were. It’s just one more anomaly shared by the leader of the country with the world’s largest reserve of oil and that of a debt-saddled island in the Caribbean. The symbiosis between Cuba’s emeritus or former (and in most ways, still de facto) commander in chief and the Venezuelan colonel-turned-oil-sultan is the most powerful and fascinating political alliance in the Americas. Five years before becoming president in 1999 and two years after a failed coup attempt, Mr. Chávez was released from prison and flew to Havana in hopes of meeting his revolutionary hero. Waiting to welcome him at the airport was the man himself. It’s been a lovefest ever since, with Mr. Chávez declaring that Venezuela is sailing in Cuba’s “sea of happiness.” More crucially, after Cuba lost its Russian patron and plummeted into economic free fall, Mr. Chávez gave his friend one of the most magnanimous gifts in history — around 100,000 barrels of oil every day, gratis, with no strings attached — for as long as Cuba wanted it. In exchange, Mr. Castro sent thousands of doctors to Caracas — a deal derided by some critics as “oil for ointment.” No one doubts who got the better deal. Unlike the quid-pro-quo-demanding Soviets, who picked up most of Cuba’s tab for three decades, Mr. Castro now receives adoration from a leader who happily calls him “mi padre.” Not without reason. In 2002, when a coup appeared to have dislodged Mr. Chávez from power, it was Mr. Castro who spent night after night on the phone, tutoring his charge in a strategy to regain power and dispatch his enemies. “Don’t resign! Don’t resign! I kept telling him,” Mr. Castro recounted in his autobiography. Since then, Ramiro Valdés, Cuba’s pre-eminent policeman and spymaster, has made Caracas a second home, reorganizing Venezuela’s military, police force and Internet services (a fiber-optic cable connects the two countries like an umbilical cord). Cuban advisers are dotted throughout Venezuela’s ministries, offering counsel on everything from literacy to opposition movements and elections. There will not be another coup, or many more elections. “Deep down,” says the Venezuelan convalescent in chief, “we are one government.” They don’t call it “Venecuba” for nothing. Hence, if the health of either man further fails — and both are walking the razor’s edge — all bets are off. Read the full story HERE.