Viva the Cuban property revolution!
The largest island in the Caribbean is finally opening its doors to
By Laura Latham
Wednesday, 22 July 2009
For a communist country, Cuba has marketed itself pretty well over the
years. It's almost impossible to hear the island's name without thinking
of white rum, cigars, salsa, Ernest Hemingway and streets lined with
battered 1950s American cars.
It's also done a pretty good job with tourism. After decades of
isolation, the government began promoting the island's beaches and
stunning crumbling capital city, Havana, to international visitors
around 15 years ago. And despite concerns over its human rights record,
it has become one of the most popular destinations in the Caribbean,
with over two million visitors each year.
The island's communist status, along with the trade restrictions imposed
by the US government since 1959, have prevented large-scale investment
by overseas companies. However, that may be about to change. One of the
first things President Obama did on taking office this year was to
signal a thaw in relations with Cuba.
Change has come to the country; private holiday homes are on sale to
foreign buyers for the first time in 50 years, Cuban exiles can now
travel freely from the US to visit their former home, and trade and
investment restrictions are expected to be reviewed. Such moves will
undoubtedly spark a rush from developers to buy up Havana's
colonial-style buildings and beautiful beachfront plots for hotels,
apartments and holiday resorts.
The first of these is already underway. British company Esencia is
building a residential golf development, The Carbonera Club, in the
Varadero region. "Cuba is a wonderful country with great cultural
significance and potential," says chief executive Andrew Macdonald. "We
didn't base our business projections on America relaxing restrictions,
but it's an important step and makes it an exciting time to be in Cuba."
It's taken Macdonald six years to get permission for the project, but he
is seeing interest from investors all over the world. Hollywood
superstar Jude Law, pictured, has reportedly fallen in love with Cuba,
and plans to buy in the new development. "Ours is the first residential
resort sanctioned by the government and offers a mix of golf, sailing
and access to the best beaches in Cuba," Macdonald says.
The project will offer around 900 apartments and villas, with design
input from Sir Terence Conran, plus a PGA golf course, hotel, spa and
marina. Apartments start at £77,500 and rise to £1.1m for villas, but
this doesn't get you the freehold. "Foreigners can only lease property
for 75 years, but I expect the law to change in time," says Macdonald,
who believes his will be the first in a wave of residential projects
should the political situation alter.
That could be a slow and difficult process, according to Ian Taylor MP,
chairman of the Cuba Initiative, a non-governmental body set up to
facilitate British investment in Cuba. "Cuba is complicated, but there
have been a lot of changes since the 1990s," he says. "It's inevitable
that tourism is one of the first areas of growth and investment."
Taylor admits there are issues with property ownership, and that the
conditions of infrastructure are poor, especially the roads and rail
network, but he says the Cuban government is keen to encourage foreign
finance and that things will improve.
"Cuba has enormous potential and will be attractive to investors if it
does open up, but you can't make any assumptions that the political
system will change. Any investment needs to be made within the context
of the Cuban government."
Cuba: Buyer's guide
* Private property ownership in Cuba is prohibited, people have the
right to swap homes but not to buy or sell.
* Non-nationals can only own designated property via non-renewable,
75-year leases. Ownership and residency issues are complex, so don't be
tempted to buy private homes.
* Cuba is in the centre of the hurricane belt and has been badly hit
several times in the past few years.
* The political situation is still uncertain, so this is not an
investment for a novice or the risk averse.