Cuba’s New Real Estate Market, a Latin America Initiative Working Paper by Philip Peters

Introduction

he November 2011 law that permits Cubans to buy and sell residential real estate is among the most impactful of the reforms undertaken in Cuba since Raúl Castro became president in 2008. It opens a potential source of capital to the 84 percent of household s that own their homes. By ending a prohibition on the essence of property rights - the ability to buy and sell it - constitutes a positive human rights step. It has created a new and unusual real estate market where brokers were only recently allowed to operate, no mortgage finance is available, and local demand is hampered by a lack of cash to make purchases.

In response to these reforms, Cuban Americans and others are beginning to buy properties through Cubans who live on the island. Already some Cubans, especially retirees, are selling their homes to buy smaller ones, retaining a nest egg from the sale. The new policy, with an assist from a more recent judicial decision, is leading homeowners to update and register their property titles. The policy does not, however, directly address Cuba’s main housing problem - a serious shortage of residential units - but the government is beginning to implement policies that, in time and if expanded, will increase the housing stock.

This paper examines Cuba’s real estate market at this early stage of its development, describes the basic functioning of the sector and discusses the role of foreign nationals. It is based on reviews of Cuban laws and regulations and on interviews with participants in this market an d officials responsible for the policies that govern it.

Table of Contents

Real Estate Laws and the Market Before 2011

Law 288: The Legalization of Residential Real Estate Sales in 2011

Legal Processes under Law 288

The New Market in Operation

Market Experiences

Housing Stock and Construction

Can Foreign Nationals Buy Real Estate in Cuba?

Appendix 1 - Cuban Supreme Court decision permits legalization of illegal transactions of the past

Appendix 2 - One buyer’s view of the market

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