Cuba’s Real Estate Market on the Rise
In some ways, Yosuan Crespo’s real estate office resembles any you might find in New York, London or Tokyo. There are slick posters of hot properties hanging from the ceiling, a steady stream of hopeful buyers and sellers and a constant clack of computer keys.
But Crespo’s headquarters in central Havana’s trendy Vedado neighborhood is actually somebody else’s breezy front porch. The computer’s only connection to the Internet is a creaky dial-up link, and Crespo is careful to say he’s not operating as a broker, since the job is still technically illegal.
A baffling, sometimes bizarre real estate market has emerged in the year and a half since President Raul Castro legalized private home sales on this Communist-run island for the first time in five decades.
While trade in homes is now legal, the people who bring buyers together with sellers are not. The government has yet to make good on promises to legitimize brokers, most of whom still operate in the shadows.
It’s a story that has been typical of Castro’s economic reforms, which often have left little space for the sort of middlemen and other services that help markets work.
The Cuban leader also has legalized a used car market, but not the right to open a business that sells them. And while reforms have sparked an explosion of private restaurants and cafes across Cuba, the government has yet to give them access to wholesalers that could keep them better supplied.
Crespo gets around the broker ban by operating as a licensed computer programmer and photographer, helping clients list their properties on Web portals, producing the for-sale posters that hang in his office and offering digital photo services for sellers. He says he doesn’t charge commissions.
Crespo’s listed fees are just a few dollars, but he’s found himself in major demand. He estimates 30 to 40 customers a day wander into his porch-side business, called EspacioCuba. He says his service has 2,500 current listings and has helped sell about 250 properties since it opened in January.
"Right now we are very pleased," said Crespo, a smartly dressed 28-year-old computer scientist with close-cropped hair, but he added that the market would benefit by the government made brokering legal.
The market also still lacks a workable mortgage system, an easy means of advertising potential sales and, most important, a middle class with resources to buy.
Yet sales are humming, with some 45,000 homes changing hands in the first eight months after Castro legalized the real estate market in November 2011, according to the most recent statistics from the government.
Prices for the choicest properties are staggeringly high: One of Crespo’s Havana listings offers the top floor of a three-bedroom, three-bathroom colonial-style house with a marble staircase and a graceful, blue-pillared porch for $250,000 - a fortune in a country where salaries average around $20 a month.
Exiles, economists and several informal brokers say much of the money is coming from abroad, some of it in under-the-table deals that lack legal protection and run counter to Cuba’s ban on foreigners owning property.
In South Florida, home to the largest Cuban exile community, stories abound of people buying homes for family still on the island, or using relatives as fronts for their own purchases.
"I am aware of a number of people who have purchased property in Cuba," said Carlos Saladrigas, co-chairman of the Cuba Study Group, which advocates for closer ties between the U.S. and Cuba as a way to promote democracy.
"And (there are) many others who are financing small businesses in Cuba owned by their relatives," he said.
Cuban law says only permanent residents are eligible to buy property, so any transactions involving outsiders are taking place through proxies. Sometimes the cash is wired to Cuba. At other times, money changes hands in overseas accounts.
A Cuban economist who is well-versed in the real estate market agreed that the presence of foreign funds is "significant," though exact figures don’t exist. He spoke on condition of anonymity because he was not authorized to speak to journalists.
Maria Isabel Alfonso, a Cuban exile who teaches at St. Joseph’s College in New York, said many recent Cuban emigres left for economic rather than political reasons, and buying property is one way for them to maintain ties to the island.
"For many years I have been trying to overcome that feeling of having lost the connection with Cuba," she said.
There are more pratical motivations for people who haven’t left the island. Divorced couples have forced to remain under one roof for years, and multiple generations commonly cram together under one roof. The ability to buy and sell gives everyone more options.
When office worker Milu Selis needed her own space, she and a relative sold their place in Vedado, and each bought a smaller apartment.
"This greatly eases the problem of dividing," she said. "It makes life easier."
Selis and others say it has been surprisingly easy to navigate the bureaucracy, with title transfers taking place in days and a 4 percent tax levied on both buyers and sellers.
Some warn that potential buyers should be wary because Cuba’s real estate market is far from transparent. They say buying in somebody else’s name with no legal protection is inherently risky, especially since many buildings are in severe disrepair. And while Havana’s stately mansions are still drawing big money, prices for less tantalizing properties are starting to stagnate or drop, they say.
"It’s a very, very young, imperfect market and it’s going to be very difficult as a result to get real supply and demand there," said Joseph Scarpaci, a marketing professor at West Virginia’s West Liberty University who studies Cuba.
Associated Press writers Andrea Rodriguez and Paul Haven and Christine Armario contributed to this report.