Cuba opens door to comfort
Damien Cave, Havana
August 6, 2011
JOSE is an eager almost-entrepreneur with big plans for Cuban real
estate. Right now he works illegally on trades, linking families who
want to swap homes and pay a little extra for an upgrade.
But when Cuba legalises buying and selling by the end of the year, Jose
and many others expect a cascade of changes: higher prices, mass
relocation, property taxes and a flood of money from Cubans in the US
and around the world.
''There's going to be huge demand,'' said Jose, 36, who declined to give
his last name, keeping an eye out for eavesdroppers. ''It's been
prohibited for so long.''
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Private property is the nucleus of capitalism, of course, so the plan to
legitimise it in a country of slogans such as ''socialism or death''
strikes many as jaw-dropping. Indeed, most people expect onerous rules,
and already the plan outlined by state media would suppress the market
by limiting Cubans to one home or apartment and requiring full-time
Yet even with some state control, experts say, property sales could
transform Cuba more than any of the economic reforms announced by
President Raul Castro's government.
Compared with the changes already passed (more self-employment and
mobile-phone ownership), or proposed (car sales and looser emigration
rules), ''nothing is as big as this'', said Philip Peters, an analyst
with the Lexington Institute.
The opportunities for profits and loans would be far larger than Cuba's
small businesses offer, experts say, potentially creating the
disparities of wealth that have accompanied property ownership in places
such as eastern Europe and China.
Havana may face a move back in time, to when it was a more stratified
city. ''There will be a huge rearrangement,'' said Mario Coyula,
Havana's director of urbanism and architecture in the 1970s and '80s.
''Gentrification will happen.''
Broader effects could follow. Sales would encourage much-needed
renovation, creating jobs. Banking would expand because, under newly
announced rules, payments would come from buyers' accounts. Meanwhile
the government, which owns all property now, would hand over homes and
apartments to their occupants in exchange for taxes on sales –
impossible in the current swapping market where money passes under the
And then there is the role of Cuban emigrants. While the plan seems to
prohibit foreign ownership, Cuban-Americans could take advantage of
Obama administration rules letting them send as much money as they like
to relatives on the island, fuelling purchases and giving them a stake
in Cuba's economic success. ''That is politically an extremely powerful
development,'' Mr Peters said, arguing that it could spur policy changes
by both nations.
The rate of change, however, will likely depend on complications
peculiar to Cuba.
There are no vacancies in Havana, Mr Coyula pointed out. Every dwelling
has someone living in it. Most Cubans are essentially stuck where they are.
Ilda, 69, lives alone in a five-bedroom, ninth-floor apartment with
views of the sea. A visiting Cuban-American couple – ''chic, very well
dressed,'' she said – asked to buy her apartment for $150,000, with
little care for any bans on foreign ownership.
''I told them I can't,'' Ilda said. ''We're waiting for the law.'' And
even when the law changes, she would prefer a trade, because she would
be guaranteed a place to live.
For now, though, Cubans are trying to grasp basic details. How will the
mortgage system work? How high will taxes be? What's a fair price?
There is even a question of how buyers and sellers will come together.
Classified listings are illegal in Cuba, which explains why brokers like
Jose, known as corredores, spend their days moving through open-air
bazaars with notebooks listing apartments offered or desired. He already
has two employees working for him and expects to hire more. ''We have to
get co-ordinated,'' he said. ''It's coming.''