Tempted by Havana? 10 Golden Rules to Make More Out of the Land of Mojitos and Salsa!
MEPM Property Managing Director Edward Hill shares with you his 10 golden rules for making more out of the land of Mojitos and Salsa!
Mention the word “Havana” at any dinner party and most guests, with the possible hint that THE next jet set destination is well on its way, are hanging on your every word.
As with any “emerging” destination, the early investors are the bravest and those who will be making the biggest returns; the issue is that the Castro administration also know this. It can, and will, be very rough sailing until the regime realizes that it has no other option but to collaborate with the capitalist world and open things up for foreign investment.
Until then, check out our 10 “Musts” for visiting Cuba if you are thinking of investing
No 1 - RESPECT THE GOVERNMENT
The Castro’s are not the tree hugging communist loving regime that their propaganda likes to make out. They are little more than a closed business, determined to squeeze every USD out of the country for themselves. The country is ruled by Raul Castro and a very close network of military colleagues backed by a powerful army. The rules are their rules. Never ever think to by-pass them. They, at present, will always win.
No 2 - FOREIGNERS CANNOT OWN PROPERTY IN CUBA
Unless you are a foreign multinational prepared to inject in excess of USD 300m in large scale projects, you as a foreigner are not allowed to own real estate in Cuba. The only way you can get involved in a property in Cuba is to offer a long term 150-year lease to a Cuban national on a property - they retain ownership but there is nothing to stop you making profit on selling the lease on. For those desperate to enter the market early, this is the best available option. Do not attempt as a foreigner to purchase a property in your own name or that of a ‘puppet’ Cuban national. The authorities are not stupid and they can easily see when a penniless Cuban suddenly finds himself the owner of a USD100,000 apartment. The title deed will be null and void before you can say VIVA CASTRO!
No 3 - CHOOSE YOUR SPOT
At present the only real area of potential in Cuba are the centre of Old Town Havana or the cigar growing area of Vinales. Be very careful of coastline projects as you will find that these have already been “spoken” for. Many Canadians have already put side bets on prime slices of land with local Cubans and they are just waiting for the chance. So a seemingly unspoilt beach front with grassy meadows and a sandy beach could be the next Benidorm!
No 4 - VALIDATE LOCAL INFRASTRUCTURE
Many people want to buy a ‘ruin style’ flat in Old Town Havana. Average price for rundown apartments in town are around USD55,000. Purchasers do a calculation; combining the purchase cost and adding a further USD55,000 for renovations, and they have themselves a stunning boutique flat worth USD400,000! In essence the maths is correct, but all of this falls apart unless you have the right team to ensure the results. Paperwork, labour and materials are a nightmare to organise. You will need an ‘A team’ to get things done. So choose your partner and advisors carefully.
No 5 - CUBAN LIVING IS NOT CHEAP
Due to the fact that there is a two tier currency system a stay in Cuba can cost more than you may think. All foreigners have to use CUC (Cuban Convertible Dollars) which is on a parallel with the USD. Only locals can use the Cuban peso and it has next to no value. So, be prepared to pay over the odds for often poor levels of products and services. Five-star hotel chains are a total rip off given their prices and the poor state of the buildings and accommodation.
No 6 - ACCESS TO CASH
There are only 5 cash points in all of Havana with a maximum withdrawal limit of CUC40 per withdrawal. There are always HUGE queues outside the exchange kiosks, especially when cruise ships come in. If you are undertaking building renovation, construction or anything to do with real estate this is a serious hurdle, so take with you at least 10,000 Euro or Sterling with you. DO NOT BRING IN USD – the Cuban banks do not like the USD and there is a penal exchange rate of USD to CUC.
No 7 - NO NATIONAL INTERNET OR INTERNET DATA!
In order for the government to stop unfavourable comment reaching its population from outside, internet is seriously restricted to 5 star hotels on a scratch card basis only. You will need to do any serious or important communications prior to arriving in Cuba. Rely on the local internet for menial tasks only and organise yourself to do them at a fixed time every day in a hotel lobby with an internet card.
No 8 - TRANSPORT AROUND THE ISLAND
A car with a chauffeur is the ONLY way to get around in Cuba. They are somewhat expensive but the public transport system is simply not meant for foreigners.
No 9 - KEEP YOUR INFORMATION TO YOURSELF
The friendly taxi driver, helpful hotel concierge or over attentive bar man will earn more about tipping off the government about your business plans than he ever will out of serving you. The Cuban system relies on paid informants. If a government official finds out that your novel business idea could make him money, you will suddenly find inexplicable blocks to your progress.
No 10 - BE CAREFUL OF LAWYERS
They will promise you the world and not deliver. They all claim to have excellent contacts with government ' blah, blah, blah…' yet when things start to get hairy they suddenly go impotent on you and occasionally even disappear!!
The above might seem somewhat daunting. However, with MEPM Property, we have crossed most of these hurdles and our Cuban infrastructure is in place. So it might well pay to talk to us prior to taking a look at Cuba as an investment proposition. It could save you a lot of the pain and give you the opportunity to make more of the gain.
What to find out more about investing in Cuba? Contact MEPM Director Edward Hill via email or call him on +44 7765 617 209