Cuba

Cuba’s real estate market is booming. But will it last?

Real estate in Havana is booming far beyond the affordability of a typical Cuban -- especially in Havana.
Real estate in Havana is booming far beyond the affordability of a typical Cuban -- especially in Havana. Getty Images

The numbers are stunning.

To buy a house in the once-elegant Miramar neighborhood of Havana, the average Cuban must have saved all of his salary since British troops captured the city in 1762.

That house would cost about 100,000 Cuban convertible pesos, or CUCs — the equivalent of $1.13 U.S. What isn’t even close to equivalent is the pay scale. The average Cuban earns 370 CUCs per year as a computer programmer, state shop administrator, policeman, postman or teacher..

That disparity alone isn’t startling. Almost every city in the world has elegant homes that only the elite can afford, while average residents live in moderately priced homes. But in Cuba, the price for even a modest home far outstrips local wages.

According to official figures, the 5,000 CUC asking price for a dilapidated residence in less-desirable Havana neighborhoods like Alamar Jesús María, Luyanó and Párraga equals 13.5 years of salary for an average worker. A modest 20,000 CUC apartment in Vedado amounts to 54 years of average earnings.

Successful business owners, medical personnel who have worked abroad, artists and others may be able to afford the high prices. But its people living abroad – some of them Cubans, some not – who are often buyers.

Making the situation more difficult for island-based Cubans is the financial structure. Cubans cannot access mortgages or bank loans. Real estate purchases in Cuba are generally made in cash — although sometimes the buyers throw in a car, another property, television sets, air conditioners, water pumps and even furniture.

The largest transactions are often discreetly sealed outside Cuba, many of them in Miami.

Since the Cuban government legalized the sale of private residences in 2011, thousands of houses and apartments have changed hands each year.

It was a time of change throughout the island, noted Emilio Morales, director of The Havana Consulting Group, a Miami company that monitors the Cuban economy. “The authorization for selling homes arrived at the same time as self-employment and the elimination of the ‘White Card’ permit to travel abroad. People started selling their homes to invest in a business or to finance their move abroad.”

Today more than 8,000 properties are available for sale in Cuba at any one time. Four out of five are in Havana, home to one in four Cubans.

The island’s complex real estate market is plagued by a lack of information, funding shortages and legislative gaps. Sellers don’t trust real estate agents, who are not officially organized. There are no independent inspectors or appraisers, no property insurance or transparent documents.

But perhaps the heaviest cloud over the real estate market is the well-founded fear that the laws allowing the sale of private homes can be recalled at any time.

“The current trend toward limiting the private sector, from restaurants to home rentals that were proving so successful, will soon bring with it a contraction of the real estate market,” said Morales. “That was the real aim, because the private sector was winning the competition against the inefficient state sector at all levels, from shoe manufacturing to hostels in private homes.”

For now, and seen from abroad, there’s no sign of a slowdown in the real estate market. But there are also no signs that tomorrow will be better, even though it’s one of the sectors of daily life in Cuba that most benefited from the reforms.

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