Cuba Unleashes the Pent-Up Energy of Real Estate Dreams
Jose Goitia for The New York Times
By VICTORIA BURNETT
Published: February 15, 2012
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.
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Jose Goitia for The New York Times
A new property law that took effect on Nov. 10. allows Cubans to buy and
sell their houses and even own a second home outside the cities.
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."
http://www.nytimes.com/2012/02/16/world/americas/real-estate-fever-spreads-in-cuba.html?_r=1&pagewanted=all
