Cuba’s Real Estate Market – Buyer Beware – Part I

LA HABANA, Marianao - 130,000CUC

LA HABANA, Marianao – 130,000CUC

In deciphering the validity of the Cuban real estate market, the first question is usually a simple one; “Is it real?” The answer is yes and no. In most economies, markets are driven by supply and demand. Usually, the less government intervention there is, the more accurately the market reflects a measure of supply and demand. When governments intervene, it becomes difficult to assess true value, volume of supply and demand activity.



On November 10, 2011, Raul Castro opened up the front door to Cuba’s potentially loaded real property marketplace and all that goes with it. The problem is that the door is only partially open and lacks some of the essential ingredients that drive free markets.



54 years ago, Fidel Castro’s nationalized the country’s private real estate holdings touching off a firestorm that 54 years later is still cause for heated debate about property titles. There are Cuban expatriates spread around the world that strongly believe they hold title to properties which Cuba now permits to be sold privately. That legal challenge is just the tip of the iceberg.



When Raul Castro took over for his brother Fidel in 2008, he came to power facing a number of very real economic crises. Cuba had technically been bankrupt for about ten years. Were it not for Castro’s special $5 billion per year arrangement with Venezuela and its enigmatic, deceased leader Hugo Chavez, Cuba would have been out of business years ago.

Apartamento -  LA HABANA - Plaza de la Revolucion - 80,000CUC

Apartamento – LA HABANA – Plaza de la Revolucion – 80,000CUC

Venezuela’s new president, Nicolas Maduro, does not have the luxury that Chavez had. Today, Venezuela has a struggling economy and faces massive and demonstrative public resentment along with a volatile currency. Maduro will be under immense pressure to trim down the country’s generous oil contributions to Cuba.

MATANZAS - 100,000 CUC

MATANZAS – 100,000 CUC

Raul understands the new shape of Cuba’s economy. But, transitioning to a more liberal and progressive sense of private sector expansion does not come easily in a country where the average wage is $20 per month and where private initiative has been discouraged at every turn for the last 54 years.

Havana - 65,000CUC

Havana – 65,000CUC

Raul is attempting to create and open a real estate market without the tools that drive most supply and demand marketplaces. The marketplace is conflicted by a number of influences including “Permuta.” Because government owned all property in the country, permuta served as the system that allowed Cubans to trade their residences as long as government approved. Permuta swaps still continue so the open market is not entirely open. Property values are far from transparent although when a sale is completed a central registry logs the reported price. This information is not available to the general public. Add to this the fact that reported selling prices do not always reflect the actual selling price and goodbye transparency.

Santiago de Cuba - 90,000CUC

Santiago de Cuba – 90,000CUC

At the same time, many Cubans cannot afford to acquire real estate. One of the biggest problems facing Cuban housing is the unavailability of building materials to makes homes safe and functional. Raul’s approach to opening a real estate market is comparable to privatization of the restaurant trade where entrepreneurs can open a restaurant but do not enjoy access to food wholesalers who control the best products.

LA HABANA, Habana del Este 60,000CUC

LA HABANA, Habana del Este 60,000CUC

The water gets murkier when we examine Fidel’s earlier attempts at opening the housing market. This is not the first time a Castro has tried to open the vault to the country’s real property assets. About fifteen years ago, Castro opened the marketplace to private investors only to shut it down shortly thereafter. If any one thing is consistent about change in Cuba, it is that privatization comes slowly and is unnecessarily complicated. Add to the deliberate pace the fact that progress usually occurs in a series of lurches and it is easy to understand why foreigners and Cubans are somewhat skeptical about the state of Cuba’s real estate market.


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  1. yordanka on September 23, 2014

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