Land-rush revolution - U.S.-Cuba talks rile island’s real-estate market

Land-rush revolution: U.S.-Cuba talks rile island's real-estate market

Cuba's real estate sector has been picking up in wake of rapprochement
talks with U.S.
Real estate agents and websites compete neck and neck
Obstacles and dangers lurk for those eager to jump into land rush
BY JIM WYSS AND MIMI WHITEFIELD
jwyss@miamiherald.com

SANTIAGO, CUBA
When the communist island began allowing citizens to buy and sell their
homes almost four years ago, it was a godsend for Nieves Puig Macías.

The 56-year-old retired architect is suffering from an array of health
problems — from bad kidneys to a bum arm — that make it hard for her to
get around her three-story home. She's been hoping to sell it and move
into a ground-level dwelling.

But two years later, she says she has a new problem: greedy real-estate
agents who are so keen on turning a profit that her house has
languished, overpriced, on the market.

In just a few short years, Cuba's nonexistent real-estate sector has
boomed into a multifaceted, sometimes frenetic industry: Hand-scrawled
"Se Vende" signs hang from dilapidated colonial structures and modern
condos, there are real-estate magazines and agents, and almost a dozen
home-buying websites have sprung up despite the island's extremely
limited Internet access.

Puig says her five-bedroom, five-bathroom home would sell for $55,000.
But agents keep trying to slap an additional $5,000 to $10,000 onto the
price tag.

"There are people who are interested in buying it, but the
intermediaries want to earn too much money," she said. "And it makes me
so angry — I won't let them."

If the rebirth of Cuba's real-estate industry has brought with it
free-market woes, those issues are likely to get worse in coming years.

As the U.S. and Cuba continue their slow-dance toward rapprochement, it
has fueled American fantasies of seaside Caribbean homes on the cheap,
and Cuban dreams of deep-pocketed buyers rushing across the Florida Straits.

A combination of strict laws on both sides, however, is keeping that
from being a reality.

For starters, the U.S. embargo makes it illegal for Americans to invest
on the island.

And while Cubans and foreign permanent residents can buy and sell
freely, those who live abroad are relegated to a few tightly controlled
housing enclaves that aren't particularly a bargain.

Even so, some are already jockeying to be on the front lines of an
eventual land rush, buying property under the names of eligible family
and friends. Such under-the-table sales have been going on since the
1990s, but accelerated after real estate sales were legalized and now
with the anticipation of a new relationship with the United States.

REAL ESTATE RUSH

"A lot of people, without any hesitations, without any analysis or
knowledge of the market, are rushing in to buy real estate in Cuba under
the assumption that the Americans will soon come and the prices will
double or triple," said Hugo Cancio, a Cuban-born entrepreneur who is
launching the quarterly OnCuba Real Estate magazine in South Florida in
coming days.

Combine that with Cuban exiles who want to return and "you now have an
emerging market where the prices are not proportionate to reality," he said.

In the two-tiered system, most bargains are illusory. While Puig's
$55,000 home might be a steal in South Florida, it's out of reach for
most island-bound Cubans earning pesos. And the tight supply of homes
legally available to foreign residents means they draw premium prices. A
four-bedroom, four-bathroom penthouse in a tony part of Havana, for
example, is being listed for $1.2 million. More modestly, a one-bedroom
apartment on Miramar beach is going for $435,000.

In a country where two or three generations of families often live in a
cramped space, however, there's buzz around the new opportunities.

In the chapel of Our Lady of Lourdes, at the La Merced church in Old
Havana, Cubans have tucked little homemade houses — some with picket
fences or model cars in their garages — in the niches of the grotto in
the hopes of scoring a house. It is our Lady of Loreto who is associated
with homes, but for Cubans Our Lady of Lourdes is close enough.

"Oh, look, this one has a hinged door," the Rev. Gilbert Walker, La
Merced's rector, said as he inspected the display. "What we have here is
an interesting example of popular religious expression. But the number
of houses placed here has certainly increased after real estate sales
became legal. The new law opened a whole market that was waiting to
explode."

Many of the miniature homes are charming, but sometimes buying and
selling real estate is anything but. Whether to sell a house that has
been in the family for generations, or to keep it as the ancestral home,
can be a source of friction.

One of the messages stuffed in the grotto alludes to the tension.
"Please allow my brother to acquire rights over the home that is in a
legal dispute with his sister-in-law and grant him much happiness in his
home," it reads.

Another plaque gives thanks to the virgin for "granting me the miracle"
of a home.

AGENTS VS. WEBSITES

Sandra Arias, 35, was a foreign language professor until she caught the
real-estate bug. Her fluent English landed her a job with an agency, but
business was good enough that she struck out on her own a few months ago.

While many of her buyers are local, or returnees, her specialty is
working with foreigners, primarily Canadians, French and Russians. And
the announcement of formal U.S.-Cuba talks has been good for business.

"Since January, we've seen a big jump, a lot more clients in Havana,
where most of the movement is," she said.

Increasingly, her competition is not other agents but the proliferation
of websites.

"When people start looking for houses they go to the Internet first,"
she said. "That's my competition, so I have to use Instagram and Twitter
to get the word out about my properties."

For many Miami-based Cuban Americans who lost homes and businesses
during the Cuban Revolution, the thought of a thriving real-estate
market is anathema. Many say they don't need to look for property in
Cuba, they just want theirs back.

José Fernández's family fled Cuba to Miami when he was 5. Now 59,
Fernández has been in the commercial real-estate industry for 40 years.
And while he's sensitive to the concerns of old-timers, he's also
interested in playing a role in the new Cuba.

He's traveled to the island six times in the last two years to visit
family and scout for opportunities. But the prospect of buying a house
under someone else's name — even a close relative — is a recipe for
heartburn, he said.

"How many times has a cousin told another cousin 'I'm going to give you
the money right back?'" he said. "Unless you are willing to let them
keep the house, it's not a good idea."

There are also obstacles to turning a profit: Cubans are only allowed to
own two homes, there is no financing and no foreclosure laws, and the
government has said it will not allow property speculation.

"There are a lot of ways to make money in Miami; we don't have to go to
Cuba to make money," Fernández said. "I just want to be part of the
changes that are going on."

There might also be risks for those who dive in too early.

The decayed charm of a pre-Revolution apartment might be seen in a
different light if, for example, the Related Group begins building
modern condos on a nearby lot, Cancio said.

"What happens to the price of that building right next door [to the new
construction] from 1947 that has issues with getting the water to the
ninth floor and has no parking?" he said.

As for Puig, she said she's given up on agents. When she feels well
enough, she'll walk down the street to an Internet café and list her
home on any number of websites. Her neighborhood, Los Sueños or,
roughly, The Dreams, is close to the Moncada Barracks — the birthplace
of the Cuban Revolution — and it gets a pleasant breeze, she said.

"I know how much it's worth," she said of her home. "This is one of the
best neighborhoods in the city."

Source: Land-rush revolution: U.S.-Cuba talks rile island's real-estate
market | Miami Herald -
http://www.miamiherald.com/news/nation-world/world/americas/cuba/article38890017.html