With Property Rights, Real-Estate Fever Sweeps Cuba

February 17th, 2012

The Times reports on the aftermath of Cuba’s decision to allow people to buy and sell property.

All over the capital and in many provincial towns, Cubans are beginning to inject money into the island’s ragged real estate, spurred by government measures to stimulate construction and a new law that allows them to trade property for the first time in 50 years.

The measures are President Raúl Castro’s biggest maneuver yet as he strives to get capital flowing on the island, encourage private enterprise and take pressure off the economically crippled state.

For decades, the government banned real estate sales and kept a jealous grip on construction. Materials were scarce, red tape endless and inspectors meddlesome. Black marketeers would deliver cinder blocks by cover of darkness, and purchasing a bag of sand was a furtive process akin to buying drugs.

But during the past two months the state has reduced paperwork, stocked construction stores, legalized private contractors and begun offering homeowners subsidies and credits.

Amazingly, where once there was no incentive to invest and improve, now, with property rights, the incentives exist. The invisible hand peels back the sugarcane curtain.

As fixer-uppers go, Carmen Martínez’s derelict shotgun house is no cakewalk. The living-room roof collapsed 15 years ago, and the porch soon followed suit, leaving two teetering columns with nothing to hold up. The bathroom is a squalid privy, and the kitchen consists of a sink with no taps and two oil drums full of water. But roofs — even half-missing ones — are a hot commodity these days in Havana, which has been swept by a bout of real estate fever. So Yoél Bacallao, a 35-year-old entrepreneur, offered to repair Ms. Martínez’s dilapidated house for free on one condition: that she let him build an apartment of his own on top of it.

Freedom is infectious.

For my previous post on property rights in Cuba see here and here.