Hairdressers to offer Cuban realty a face lift

This week's good news for hairdressers in Cuba may be even better news for real estate players around the world. If that statement sounds surreal, it is not meant to be: it is merely recognition that the first step in Cuba's liberalisation of its 'soft' economy may ultimately end with real estate being freed from state control, too. The story is this. Cuba is permitting hundreds of barbershops and beauty salons – state-owned and controlled since 1968 – to be run by their employees. They can, if they choose, rent the space where they work and pay taxes instead of receiving a monthly government wage. This proposal comes from Raul Castro, reformist brother of ailing Fidel, and it allows barbers and salon staff to charge whatever the market will bear, and to sublet all or part of their salon to others in the same trade.

At a stroke, this creates not only a tiny free market for the hairdressing industry but also introduces valuable concepts applicable to real estate, too – rents, market-led prices, sub-letting. Under communist control since its 1959 revolution – when almost all private homes were seized and nationalised – Cuba has not kept pace with the rest of the world, as I saw for myself when I visited last year.

The streets are full of old European cars of different vintages and dubious reliability with a few American classics here and there. Finding a good restaurant is still a hit-and-miss exercise and shops are surprisingly hard to spot, even in many residential suburbs. But large numbers of children playing in the street and an absence of obesity are reminders that falling behind the times is not always a bad thing – the western world could still learn a lot from Cuba.

In real estate terms, Havana's tourist-filled old town has been meticulously restored to make it part-tourist hot spot, part real-estate hot spot.

You can imagine private investors here: glamorous pieds-a-terre would, frankly, fetch a fortune, whether for overseas purchasers or any Cuban business elite that may one day emerge.

In Havana's tree-lined suburbs of Vedado and Miramar there are other opportunities – even if, for now, they represent merely crumbling 19th and 20th-century architecture. These are the most expensive and sought-after locations, home to diplomats and those who have clearly made money even under one of the world's few remaining communist governments. These locations too will be ripe for regeneration if private investment is allowed into real estate.

Then there is Varadero, two hours by car from Havana – it is only 140 kilometres away, but the roads (even main roads) are in poor shape. At Varadero the beach is beautiful but packed and bougainvillaeas line neatly manicured lawns. There are clusters of hotels, restaurants, shopping malls and even a discotheque or two, giving away the fact that this is Cuba's principal tourist resort.

Although tame and unambitious by the standards of many resorts, this is surely where the first real estate change will appear. Thanks to relaxed rules on imports, young locals now carry mobile phones and watch plasma-screen televisions; hotels advertise with "Wi-fi here" signs; there are Benetton and Zara shops and the occasional modern black Mercedes can be seen.

Varadero is also likely to be the scene of the first private holiday home development on the island. Called The Carbonera Club, it will be a collaboration between UK-based Esencia Hotels and Resorts and the Cuban government and should eventually include 800 villas and apartments, an 18-hole golf course, private and communal pools, a yacht club and restaurants. I say "should" because, as with much of Cuba, the bureaucracy is everything. When I visited last summer the Carbonera deal was about to be signed by government representatives – apparently it still is.

It is perfectly possible that the scheme, which received acres of global press publicity 12 months ago, may or may not take place. If it does, it may be quite different to how it was planned.

In a way that does not matter because it will be the first such scheme and, inevitably, it will lead to others.

Any 'first scheme' of this kind will probably make mistakes or be hamstrung by the Cuban authorities' initial nervousness over such a development. But real estate liberalisation will, eventually, happen – if not at the Carbonera Club, then something and somewhere else on this beautiful island.

And when it does occur, it will owe just a little to the experience of hairdressers and salon owners who, it seems, will be at the forefront of Cuba's transformation.

 

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