What a difference three years makes. In 2011, President Raul Castro lifted the ban on buying and selling real esate in Cuba, a revolutionary step for the island’s housing market – because until that point, there effectively was no housing market at all.
The laws, introduced in November almost three years ago, followed years of black market bartering in streetmarkets and let residents of the island legally exchange, donate and sell homes for the first time. Cubans were even allowed to own two homes, including a holiday home, although buyers would have to prove their funds were legitmate.
Foreigners, though, were not permitted to purchase property: they required a permanent residence in order to take part in the housing revolution. Despite that, people overseas remained interested: approximtaely $1 billion entered the island each year in remittances from Cuban relatives living in the USA.
Now, though, Cuba is offering residency to those who want to buy from abroad. The government announced this month a “temporary residency” visa for overseas investors buying or leasing property, completing the country’s turnaround from its socialist past.
The plans arrive just as the island officially allows overseas investment in the country’s real estate. A new investment law was approved in March that would authorise the sale of of real estate to those outside of the country, part of an attempt to encourage investment from overseas.
Indedd, Cuba needs to attract $2 billion to $2.5 billion in foreign direct investment (FDI) every year to meet its target of 7 per cent economic growth, the minister for foreign trade and investment Rodrigo Malmierca told Cuban TV in March:
“If the economy does not grow at levels around 7 percent … we are not going to be able to develop.”
The new law will also halve profits tax from 30 per cent to 15 per cent, with investors exempt from the levy for eight years, reports Reuters. Some experts argued that confidence would be needed as well as tax cuts, assurance that foreign investors’ capital would be secure in the island’s economy.
“We have to provide incentives in order for them to come,” Malmierca added.
Now, they have one: visas. The renewable permit is valid for one year and will be available for foreigners “who are owners or lessees of real estate, as well as their foreign relatives who might require it”, reports the Havana Times.
Foreigners “may carry out activities related to tourism and business duly authorized by the existing legislation”, although any other activities will require another special permit.
If investors conduct “behavior that violates the Constitution”, remain outside of Cuba for one year, or cease to lease or own the property, the visa will be revoked.
The scheme follows several around the world from struggling housing markets attempting to stimulate their own economy with investment from non-EU buyers.
From no property trade at all to a housing market similar to Europe? What a difference three years makes.
Where will Cuba be in another three years’ time?
Author – Dan Johnson