Real Estate industry in Cuba
Cuban housing industry acknowledged private ownership for the first time since the revolution
Since the 1959 revolution, Cuba’s housing has followed a distinctive social and economic direction as one of the few surviving communities with a state-led Socialist economy. However, in July, the Cuban National Assembly adopted a new draft constitution that acknowledges that business processes, including the freeing up of the residential private property market, play a broader role.
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This economic restructuring builds on a previous program of modernization, the 2011 reform package of Lineamientos, which initially allowed Cubans to buy homes, aimed at boosting annual GDP growth and maximizing foreign investment.
New business changes seek to make the socialist policies of the world more competitive, with land ownership sitting alongside other initiatives that will propel a new wave of entrepreneurs.
However, analysts like Luis Carlos Battista have suggested that reforms to the new constitution do not mean a competition that is fully free and open. The socialist system of Cuba still tightly controls self-employment, with fines for breaches, for instance. Yet opportunities are increased with the statutory shift of private land.
It is now estimated that homes nationalized in the post-1959 transitional era are worth over US$100 billion. Although the Cuban government does not publish property valuations, in Havana, a city popular with foreigners, and where an apartment can be bought in a working-class neighborhood for less than US$15,000, real estate brokers say valuations are growing rapidly.
Private property purchases to foreigners remain illegal, and circumventing these prohibitions is particularly dangerous, particularly in a mostly all-cash real estate market that provides neither title insurance nor the simple guarantee of property rights for foreigners, arranging for a friend or family member (in Cuba) to buy properties on behalf of someone else.
However, recent economic changes have raised concerns that a new real estate boom would fuel foreign investor speculation and displace Cubans. In the housing market, there is already a recorded underground boom, especially driven by Cuban Americans.
The historical peculiarities of Cuban social housing indicate that social distinction from homeownership was generally avoided, despite some economic stratification during the post-1990′ unique era’ of austerity.
But a new pattern has been created by the emerging demand in housing (whether legal or illegal)-a concentration of those with the greatest buying power in the most attractive places. For low-income families with a decent home in a suitable place, the potential to sell houses now would be an incentive to turn the value into cash to satisfy more critical needs.
Similarly, in places of their choosing, the “new rich” will now be able to purchase affordable homes as they will now be able to channel their wealth.
Cuba continues to confront an overall housing and housing shortage problem, with insufficient funding for large housing projects. The authorities also cut the minimum standards for new controlled housing, introduced a grant for home renovation for the poorest, and established a policy to eliminate some of the worst conditions in older housing, the Citadelas.
Replacing older forms of participatory improvement of local communities is the transfer of tenants to new housing projects. In addressing mass housing demands, however, major problems remain.
The emerging property market in Cuba is primarily the product of domestic investment, despite concerns of an increase in foreign ownership. Many of the 90 percent of Cubans who work for the government rely on the informal economy, the bolsa Negra, to cover low pay, with average wages of US$35 a month in some areas.
A Cuban property owner may lawfully convert rooms inside their primary residence to host a guest (usually a foreign tourist) who pays a sum for one night many can normally hope to receive in a month to make extra cash. Houses for sale in Cuba is a motto used by the Cuban government for better GDP.
Airbnb has caught the eye of the growth of private homestays in Cuba and more than 22,000 rooms have been listed on the site since it started operating in Cuba in 2015, producing at least US$40 million.
It reported that Cuba was their fastest-growing market as part of Airbnb’s US government lobbying efforts to restore Obama’s “people-to-people” visas that allow Americans to visit the island without being part of a community trip (albeit from a low initial base).
Airbnb successfully lobbied Congress that under a “Support for Cuban People” strategy, living in a specific casa would be tolerated, since Airbnb rent goes to tenants rather than the state. Cuban housing industry is growing up so fast.
Cuba’s lack of mass internet connectivity, primarily accessible only in tourist hotels, some offices, and a rising number of local internet points, is a key problem for Cuban enterprises and businesses such as Airbnb. Miguel Diaz-Canel, the current president, recently unveiled plans to phase out mobile internet services, extend access to an extra 5 million users to improve the economy, and “help Cubans defend their revolution.”
Airbnb’s future extension could, however, offer a reason for concern. Elsewhere, it has had a big distorting impact on the economy, raising monthly rentals and driving out residents.
Houses for sale in Havana, Cuba are very expensive but proved a huge success in the tourism department. Beaches in Havana have luxury and class for the foreigners.
A significant improvement in the Cuban economy and/or the ending of the US economic blockade is what housing in Cuba needs. However, new constitutional changes may go some way to support an entrepreneurial business sector alongside the state sector, although it requires resources for construction and renovation to address Cuba’s undeniable housing needs.
This would undoubtedly be popular among Cuban citizens, improving their quality of life, and particularly among the younger generation who could not secure their own homes. Once the draft constitution has been approved, lawmakers will put it out for consultation and, subsequently, for a national referendum. Foreign investors are watching and lobbying, but it will ultimately be the individuals that decide.
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