A two-story, six-bedroom house in the coastal Santa Fe area west of Havana is on sale for $1.5 million. Another, with “capitalist luxury from the 1950s” in the upscale Miramar neighborhood, is offered at $600,000.
The real estate market in Cuba is a multimillion-dollar business that accounts for nearly half the island’s Gross Domestic Product (GDP), according to a study published by the Miami-based magazine CubaGeografica.
The author of the study, sociologist and urbanist Carlos García Pleyán, estimated the total value of the houses sold from 2011 until 2014 at about $1.5 billion, or about half the GDP the government reported in the same time frame.
The sale of private real estate was legalized in 2011, sparking a boom in the market. García Pleyán, who lives in Havana, said that 45,000 sales were reported in 2012 and 88,000 in 2013.
Premium content for only $0.99
For the most comprehensive local coverage, subscribe today.
At its peak, he said, “the market may have reached about 100,000 transactions a year.” But the sheer volume of transactions is now on the decline.
As early as 2015, the volume started to drop, he said. “Right now, the restrictions on immigration imposed by the United States have helped to shrink the market.”
As in all real estate markets, location matters. For properties in less desirable areas, costs range from 5,000 to 25,000 Cuban convertible pesos, known as CUCs. Others near central, tourist or seaside areas bring prices from 50,000 to 1 million CUCs. (One CUC equals $1.13.)
With the average public-sector salary at about 360 CUCs per year, few local Cubans can afford such prices. The implication: Most of the purchases are being financed by foreign buyers .
Many of those are Cuban Americans, who have invested in houses on the island so relatives can live or run businesses from them. Foreigners cannot legally buy real estate in Cuba, but many use third parties for the deals, García Pleyán said.
Properties in Havana, Matanzas and Santiago de Cuba have the highest prices. Among the most expensive areas are at Varadero Beach in Matanzas and in the Havana neighborhoods of Miramar, Siboney and Vedado. Kholy, home to many military officers, also brings high prices.
García Pleyán said his observations were based on sales posted on websites in 2017, news articles, studies and other published data. The Cuban government has released few official statistics.
For instance, the website porlalivre.com shows more than 1,000 properties listed at more than $100,000, including 43 priced at more than $500,000 — most of them in Havana.
Several announcements on Porlalivre use the adjective “capitalist” to indicate the property was built before 1959, which adds value to the home because it is considered higher quality.
“It’s a capitalist apartment on a first floor, on Avenue L, half a block from the Havana Libre” hotel, read one advertisement posted Aug. 2. The owner asked for $100,000.
Another ad for a house in the same area included precise instructions on the payment: “In Canada, $400,000 in US dollars; 200,000 CUC in Cuba and $200,000 in Cuba.”
Such exorbitant prices never appear in the final sale documents because buyers and sellers usually agree to write down a number close to the property’s nominal value.
In an effort to boost tax collections, the government last year established minimum price guidelines for home sales based on their location and other factors. Still, the difference between the official prices and the real prices remains enormous.
María Rodríguez, a real estate agent, or “buy-sell manager,” as they are known in Cuba, said the sellers of high-value properties offered on the Internet are Cubans, but the buyers are foreigners or “repatriated” Cubans who live abroad.
A sale of that type can take “months and years” to finalize, Rodriguez said by telephone from Havana.
Many of the “repatriated” Cubans don’t really live on the island, but have reestablished their legal residence on the island in order to be legally able to buy property in Cuba. (The Cuban government considers any Cubans who live abroad for more than two years as emigres who lose their property, civil and political rights. The process of repatriation restores those rights.)
While repatriated Cubans are contributing to Havana’s gentrification, they aren’t solely responsible. Cubans who receive remittances from relatives abroad, those with profitable businesses, artists and sport figures are part of a new class of elites, García Pleyán noted.
Gentrification is most evident in areas like Old Havana, where wealthy buyers have even taken over entire buildings in order to use them as Airbnbs and tourist lodgings — even though the practice is illegal.
The government, which owns hotels that compete with the private tourist accommodations, recently increased the regulations on real estate sales in areas like Old Havana and Varadero.
The new measures, published in the Official Gazette, are aimed at controlling “the population increase” as well as the competition from the private sector to avoid “affecting the (government) programs for tourism development.”