Obama and Castro’s detente opens opportunity for US real estate investors
Last Wednesday, 31 August, a JetBlue Airways flight left Fort Lauderdale, Florida and landed at an airport east of Havana, Cuba, marking the first US commercial passenger flight to the Caribbean island nation in over five decades.
The flight is the latest step in an easement of tensions between the US and Cuba stemming from Barack Obama and Raul Castro’s announcement in December 2014 that the former rivals would restore economic and diplomatic relations.
Following the flight, the US government said it had finalized plans to grant eight airlines permission to operate a total of 90 daily round trips to Cuba’s nine international airports, which presents a new boon to tourism there along with new opportunities that US real estate investors have begun to jump on.
In March, Starwood Hotels & Resorts became the first American company to seize on the opportunity after the US Treasury granted the firm permission to operate three Cuban hotels: the Four Points Havana, the Gran Caribe Inglaterra and Hotel Santa Isabel.
The Treasury, which will only allow US entities to purchase property or conduct business in Cuba with a special license, also approved Marriott International’s application to develop multiple hotels on the island that same month.
With Starwood and Marriott paving the way, interest among other US real estate investors has spiked, and many expect US investment there to rank among the highest in Latin America this year.
A July report from Ackerman, the law firm that worked with JetBlue to coordinate regularly scheduled flights to Cuba, found that 32 percent of industry executives anticipated that the island nation would see the greatest increase in US investment among Latin American countries this year. The results showed that “market forces and interests” were already “ahead of the law.”
“US businesses are starting to see the island as an opportunity,” attorney Augusto Maxwell, chair of Cuba Practice at Ackerman, tells me. “I’ve spent many years in efforts to prod US businesses to look at the island, and now folks are considering long-term opportunities.”
Maxwell says Ackerman is working with several hospitality and marina companies to build infrastructure — flights, money transfers, communication channels, energy and water infrastructure — that will lead to more real estate development there.
Though the process and rules have not been formalized, foreigners have been able to raise significant capital on renovation or construction projects, he says.
With flights to Cuba underway and major US hotel chains now operating there, real estate opportunities will only begin to expand — particularly those that cater to an inevitable tourism spike — as the two nations and its regulators continue to cut through the red tape. In the meantime, it will be worth it for US real estate investors to hop on board a flight to Havana to get a lay of this new land of opportunity.