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* Sales are rising under reformed real estate rules
* Prices average $25,000 to $40,000
* Foreign buyers are looking for ways to jump in
By Jeff Franks
HAVANA, March 20 At an informal housing market
on Havana's historic Paseo del Prado, Renaldo Belen puts the
hard sell on a prospective buyer under a tree hung with
hand-lettered signs advertising homes for sale.
A house near Boyeros, the avenue to the city's airport, is
being offered for the equivalent of $120,000, with all the
"The house is beautiful, it has four bedrooms, a pool with a
bar and a fountain with a lion's head on top. Look," says Belen,
pointing to photos on the sign, "water comes out of the lion's
Pausing for dramatic effect, Belen, one of the many touts,
or "runners" working at the market, delivers what he hopes will
be the coup de grace.
"This place needs no work. It is of capitalist
construction," he says, using a now frequently invoked
commendation meaning it was built before Cuba's 1959 revolution
and is therefore of superior quality.
Given that "capitalist" has been a dirty word in
communist-run Cuba for the last half century, the description
perhaps grates on the nerves of Cuban leaders.
But its widespread usage is a sign of the times on the
Caribbean island, where President Raul Castro has loosened
things up as he tries to modernize the country's economy in the
name of preserving the socialist system put in place by his
older brother Fidel Castro.
HOME SALES REPLACE SWAPPING
In November 2011, the government decreed that Cubans could
buy and sell homes for the first time since the early days of
the revolution, paving the way for a real estate market that has
become an exercise in bare-knuckled capitalism. Previously,
Cubans could only do swaps - or "permutas," in Spanish - with
"For Sale" signs are now a common sight on homes and
apartments across the country, more than 100,000 properties are
posted for sale on Internet sites and even state television has
gotten in on the act, devoting part of a daily show to sales
announcements sent in by viewers.
The government last released figures on the market in
September 2012 when it said 45,000 dwellings had changed hands
in the first eight months of the year, partly through sales, but
mostly through "donations."
Cubans, accustomed to finding ways around heavy-handed
government rules and regulations, say many sales are disguised
as donations to avoid paying sales fees and taxes.
The new market, despite its apparent vibrancy, is still
sorting itself out and still faces hurdles. The main one is that
many people are trying to sell and few Cubans, who receive
various social benefits but earn on average the equivalent of
$19 a month, have the money to buy.
"With the new law, you can sell your house, but there's no
money, nobody to buy. There's more being offered than there is
demand," said retired economist and math professor Raul Cruz,
who has had his apartment in the Vedado district on the market
for five months.
Havana was once considered an architectural jewel with an
eclectic mix of colonial homes and modern Art Deco construction,
but much of the city outside the touristy Old Havana district is
in a dilapidated state after decades of neglect and corrosion
from humidity and salty sea air.
A study by a Miami-based group found that asking prices
range from the equivalent of $5,000 to $1 million, with a median
price range between $25,000 and $40,000. Cuba has two
currencies, the peso and the convertible peso, the latter of
which is used in most housing transactions and is pegged
one-to-one with the U.S. dollar.
What has developed is a two-tier market, the runners at
Paseo del Prado say, with Cubans mostly buying small places for
between $5,000 and $10,000 and foreigners with Cuban connections
buying the more expensive properties.
Sixty-year-old graphic designer Pepin, who did not want to
give his full name, has been trying for six months to sell his
nearly century-old Vedado home, two stories and painted blue,
So far almost everyone taking a look has been a foreigner or
a Cuban with family abroad providing the money, he said, and all
have tried to bargain for a lower price.
"One Chinese man, for example, offered me 80,000, but I'm
not desperate or anything. If they give me what I want, fine. If
not, I'll stay here," he said, relaxing in a chair on his
plant-enshrouded front porch.
By law, the market is open only to Cubans on the island or
those living temporarily abroad. But foreigners, including
Cubans living in the United States or other countries, are
buying properties in the names of Cuban spouses, family members
Companies with offices abroad have sprung up to cater to
foreign buyers, posting photographs and descriptions of
properties across the country on the Internet. Attempts to speak
with one of them, Point2Cuba, went unanswered.
The reasons foreigners buy are varied, said Emilio Morales,
president of the Havana Consulting Group in Miami.
"I have heard of people who are buying homes and turning
them into businesses," he said. "Some are looking for an
investment, others doing it for their family (in Cuba)."
The Cuban government has laid the groundwork for allowing
foreigners to buy property on the island, but only in resort
developments for which approval has been pending for years.
It could inject billions of dollars into the cash-strapped
economy by opening the real estate market to all in a new
foreign investment law, said Morales.
Information on pricing in the real estate market is sketchy,
but the general sense among Cubans is that asking prices began
high and have come down somewhat.
Most blame the drop on the supply and demand problems, while
others point the finger at another Raul Castro reform - a newly
liberalized migration law, which took effect on Jan. 14 and
makes it easier for Cubans to go abroad.
"Prices have dropped now because there's a greater incentive
after Jan. 14 to sell and abandon the country. Which is to say
that people hurry up and want to sell quickly," said Roberto
Perez, who is trying to sell his two-story home near the sea in
Havana 's Playa district for $200,000.
The prices depend on the necessity of the seller. "Someone
who has a visa (to go to another country) and has a house worth
60,000 may sell it for 30,000," said Belen, the Paseo del Prado
Selling is being driven by Cubans wanting to cash in on the
sole major asset most of them have. One of the quirks of Cuban
communism is that while most things are property of the state,
the vast majority of the country's 3.2 million homes are owned
by the people living in them.
"This is one of the things that gave longevity to the
Revolution. They have something that most people in Latin
America don't have and wish for," said Miami lawyer Antonio
Zamora, a Cuban American who visits the island frequently.
While some sellers want to sell so they can leave, many
simply want the money so they can live better in Cuba. Most said
they would use part of the money to buy a smaller house, then
live off the rest or use it to open a business.
Need and the low economic standards on the island have
created some incredible bargains for people accustomed to paying
high housing prices in other countries.
One woman, who did not want to give her name or the location
of her residence, said she had recently sold the six-bedroom
penthouse with a sweeping sea view she shared with several
family members for the equivalent of $130,000. The buyer was a
European with a Cuban spouse.
"I know it's going to be worth a lot more in 10 years but
everybody in the family wanted the money now. When we were
moving out, a man came running up and told me he would give me
50,000 more than whatever the sale price was, but we had already
signed the contract," she said with a sigh.
Zamora, the Miami lawyer, predicted that Cuba would one day
be a big market for Cuban Americas retirees.
"This is going to be huge," he said, noting that Cuba has
low crime and health costs, as well as good airport connections
to the United States and a well developed money transfer
industry for remittances.
"$750 in social security in the U.S. is nothing here in
Miami but it can go a long way in Cuba," he said.
(Additional reporting by Nelson Acosta and Rosa Tania Valdes in
Havana and David Adams in Miami; Editing by David Adams and