Thursday, December 25, 2014

US builders move cautiously in real frontier Cuba

The decision of Barack Obama to end half a century of enmity with Cuba encourages the prospect that US hotel operators and developers to enter the tourist market of the island.

Shortly after the announcement of the normalization of relations between the United States and Cuba, the head of acquisitions of Fortune International Realty, headquartered in Miami , sent an email to the Chief Executive, Edgardo Defortuna, with plans to investigate any change of ownership of real estate on the island.

"Much remains to US companies can do real estate development," he said in an interview Defortuna, whose company builds condominiums and hotels in South Florida.

"However, the natural beauty of the area, the excellent climate, the Latin flavor and the fact that there has been no major real estate development for over 50 years justify analyzing the possibilities."

The decision by US President Barack Obama to end half a century of enmity with Cuba encourages the prospect that US hotel operators and developers, including Marriott International Inc. and Hilton Worldwide Holdings Inc., can enter the tourism market which is just 145 kilometers (90 miles) off the coast of Florida.

To do so, they must address a long way for recognition of a zone of unclear property laws and government control, indicating that move with caution.

Transparent laws
greater transparency is needed in terms of real estate laws and banking infrastructure and a system of title insurance before US investors are attracted to Cuba, said Gregory Rumpel, a managing director in Miami group Jones Lang LaSalle Hotels Inc.

On the other hand, the fact that the island is so close to the United States, one of the largest consumer markets in the world, will be a magnet, said.

"When travel restrictions are lifted, the flow will be huge," Rumpel said. "It's a country that has a large colonial history, but also has mountains, rivers, infrastructure".

The influx of tourists to Cuba grew almost 12% in October to 187,311 visitors, according to the National Bureau of Statistics of Cuba. Around 2.9 million tourists visited the island in 2013, according to the office. Almost one-third came from Canada. Cuba, the second most visited Caribbean country after Dominican Republic, according to a mid-year analysis of the region, currently has 200 hotels with a total of between 35,000 and 38,000 rooms, Rumpel said.

Canadians and Europeans dominate foreign investment, he said, and among the major operators Spanish Meliá Hotels International SA, Barceló Hotels and Resorts Novotel Hotels are counted.

Hotel operators in the United States are in a better position to enter the market developers looking to build, said Eddy Arriola, president of Apollo Bank, a lender for real estate projects based in Miami.

"Companies that are already there are hotel operators," he said. "Americans developers will find it much harder because the principal owner of the land is the Cuban government."

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