Havana Real Estate ‘Boom’ Lures Investors and Exiles

Havana Real Estate ‘Boom’ Lures Investors and Exiles

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HAVANA — Just over a year after the Cuban government permitted the first sale of real estate between private parties, a housing boom is emerging in Havana. Fueled by an influx of foreign capital, much of it from Mexico, for Cuban exiles the boom is proving to be a major draw.

It also comes amid signs that the Castro regime, which has ruled Cuba since 1959, may be nearing its end.

Since November of 2011, when the country saw its first real estate deal in half a century, there has been a sustained rise in housing prices, particularly in Havana. Asking prices have gained between 10-15 percent, while the number of properties -- some boasting "ocean views" or "panoramic vistas" of the Cuban capital -- coming to market keep rising.

And in a country with no formal advertising, such growth is being fueled by word of mouth – and the Internet. Two of the most popular sites are Revolico and DetrasDeLaFachada, both hosted outside Cuba and linking sellers and buyers with unexpected success.

Still, only Cuban citizens or foreigners lawfully residing in Cuba are allowed to buy or sell real estate. As a consequence, a brisk business in prestanombres, or name lenders, is emerging. The term is a reference to transactions in which a Cuban citizen acquires a property – on paper – while a contract with a foreigner, usually outside the country, establishes a separate ownership agreement.

At present, these arrangements are largely being carried out between Cuban citizens, who in January gained the right to travel abroad without an exit visa, and foreigners in Mexico, where prestanombres has a long tradition.

"For $10,000 USD, I'd be willing to be a prestanombre for anyone," said Joaquin Bustamente, who recently visited the southern Mexican city of Merida. "As long as it's someone who wants an investment in a residential building, I don't have a problem with that."

At the same time, officials at Cuba's consulate in Merida report "a substantial" increase in the number of Mexican citizens inquiring about residency requirements. "Suddenly,” noted one consular employee, “there's an increase in the number of Mexicans who want to go to Cuba to pursue their studies, as 'residents' in Havana."

From Exile to Investor

This latest development, which has further emboldened Cuba watchers, is also changing attitudes within Cuban exile communities where family ties to the island remain strong.

"I'd love to have a vacation house in the Vedado, or a beachfront property in Mirarmar," said David, a long-time California resident whose wife is Cuban. David, who asked that his last name not be used, added he is hopeful that through his wife's family in Cuba he will be able to find an investment property.

Bustamente has other plans. He is currently organizing a trip to Havana for a group of Mexicans and Cuban exiles under the euphemistically titled "Architectural Tours of Havana."

Those far-reaching entrepreneurial impulses are driven in part by economic limitations.

"Houses and family are in Cuba, but the money is abroad,” Alexis Aguilar, a Cuban exile living in Spain, told reporters at the Spanish news agency EFE. “For the majority of Cubans on the island, it's unreasonable to purchase a house on their salaries, [but] many people have relatives abroad who are willing to help them.”

Unless of course those relatives live in the United States, where an ongoing embargo against Cuba can make money transfers that much more complicated.

“It's more difficult to send money to purchase real estate," said David, who explained that funds intended for family in Cuba must first be wired to a bank in Mexico, and then authorized for a subsequent transfer to Cuba’s Banco Internacional, the only bank there authorized to receive U.S. dollars.

Pressure to End the Embargo

On Feb. 20 the Cuba Study Group, a Washington, DC-based think tank made up largely of members from the exile community, called for a repeal of the 1996 Helms-Burton Act, which extended and strengthened the U.S. embargo.

Doing so, it argued, “would allow the Executive Branch the flexibility to use the entire range of foreign policy tools at its disposal – including diplomatic, economic, political, legal and cultural – to incentivize change in Cuba.”

Carlos Saladrigas, the Group’s chairman, put it more bluntly. “This failed policy has only isolated the United States from Cuba,” he said in a press release. “Worst of all, it is now stifling an emerging class of private entrepreneurs and democracy advocates whose rise represents the best hope for a free and open society.”

The statement marks the first recognition by a leading Cuban exile organization in the United States that Helms-Burton has failed to secure international sanctions from other nations, such as Canada or Mexico.

It also points to the quickening pace of change happening within exile communties abroad and on the island.

"I am going to resign. I'm turning 82 years old, and I have a right to retire," announced Cuban president Raul Castro on Friday as the Cuban leader welcomed Russian president Dmitry Medvedev.

If that's the case, I know a splendid vacation home with sweeping views of downtown Havana.
 

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