Is Investing in Cuba’s Real Estate Market Worthwhile?
Obviously, no single country in the world was financially spared by the pandemic. However, Cuba has been among the countries most economically affected by the collateral damage of the virus’ outburst. At the same time, it has been and still is struggling to recover from the Trump administration sanctions. The economic downturn Cuba is experiencing started during the pandemic, but it continues till today, sending shockwaves all across the Caribbean country.
Inflation in Cuba is nowadays out of control. People can’t afford to buy vital goods such as food and gas. Workers are being fired due to cutbacks, and it’s hard to find a new job. The tourism sector is at an unprecedented low. Nonetheless, this troublesome situation may conceal some interesting real estate investment opportunities.
I, Ofir Bar, am a veteran investor with over two decades of experience in the real estate world. I have been looking for real estate markets with competitive prices that have a good potential for quite a while. After discovering the intriguing Cuban market, I had to share my thoughts about it.
Should have put a ring on it?
Due to the harsh economic conditions, Cuba is nowadays suffering from massive negative immigration, growing at an exponential rate. The inflation growth is causing a surge in prices in many sectors, meaning many people just can’t afford to buy a house. Therefore, locals run off, mainly to Panama, Mexico, and of course, the US. As demand for housing plummets, assets’ prices plunge, leaving those who wish to sell their houses and immigrate in a difficult situation.
However, Before you rush to buy Cuban real estate, you should keep in mind that Cuba is a communist country, posing plenty of restrictions on commerce, especially with outsiders. The Cuban government’s control over the economy has greatly tightened in light of the massive inflation.
Indeed, buying a property in Cuba is a bit complex. It’s even more complicated when the investor is a foreigner: There are certain restrictions you have to ‘dance through’ in order to invest in the local real estate market.
- You have to be married to a Cuban citizen — Only when you’re married to a local you can purchase a real estate asset in Cuba.
- If you have no intention of marrying a Cuban, you can only buy a property that currently belongs to a foreigner.
- You can also invest indirectly, through someone who has a Cuban citizenship. Note that if you choose this path, you probably won’t have complete control of the property. This means that if disagreements appear between you and the 3rd party regarding the asset, this might cause you trouble.
Tourism is (still) the answer
Although Cuba’s tourism is nowadays beaten down, it won’t stay that way forever. Cuba has consistently been a major point of interest, and I believe it will return to being the touristic powerhouse it used to be. Therefore, you may want to consider investing in touristic destinations in Cuba — both in commercial and residential assets. I’m mainly referring to attractive cities like Havana and Santiago De Cuba, and rural destinations like Viñales and Varadero.
Feeling adventurous?
It’s true that investing in Cuban real estate isn’t the safest bet. Cuba suffers from bad roads and infrastructure, and old structures lie abandoned and unmaintained. Neglection is everywhere. Cuba’s market is unstable, and even though I believe that future incoming tourism will help stabilize the local economy, it’s unclear how long it will take. All these factors make Cuba a ‘long shot’ for investors. However, those who will take the risk are expected to be able to purchase more assets for less capital. Taking all these considerations into account, I think it investing in Cuban real estate in times like these makes more sense for the experienced and adventurous investor.
