Will the U.S.-Cuba Goodwill Trickle Down?
WHY YOU SHOULD CARE
Because everyone loves visiting islands, and this one is at the top of many lists.
Venturing down Lindenstrasse from West to East Berlin in 1992, the main drag was already awash in swank cafés and bakeries just three years after the wall fell. But even a block or two over, you could still get a sense of the past — crumbling house facades and all.
Just as foreign investors raced into the German capital then, America’s first family has torn down a long-standing diplomatic wall and sounded the starting gun on a Western marathon into Cuba’s capital, complete with President Obama’s signature “hope” for greater freedom and investment. But how might these opportunities trickle down?
A Crumbling Capital
The romance of Havana’s colonial buildings must have architects the world over chomping at the bit. Most Cubans, due to the revolution, own their own homes. But many lack the financial means to keep them modernized, and one in seven buildings reportedly needs repairs. The island’s also suffering from an entrenched housing shortage.
Sure, Chinese cash is flowing in, and American firms are bidding. But when U.S. dollars flow, it won’t do so easily or evenly. Will Little Havana be gentrified while El Fanguito collapses? You can bet hubs near hotels and historic sites will get polished first, with other areas being left to wait. But it’s still a “tricky jurisdiction to invest in,” says Adrian Ford, CEO of U.K.-based Aperio Intelligence, who likens Cuba to Iran in that it’s “not quite open for business.” And if you think those dilapidated properties will sell for a song, think again: Some experts warn that investors are in for a shock when it comes to Cuban property prices.
Obama Leads. Will Americans Follow?
Though the U.S. commander in chief is making the rounds in Cuba, Americans still can’t travel there without a darn good reason — only certain government, business, educational, religious or family visits are allowed. “You can’t just go and buy a flight,” says Alicia Chavy, an analyst at Global Risk Insights.
“But they’re talking hotel deals,” I hear you saying. Yes, Starwood Hotels and Priceline’s Booking.com will soon cater to legal visitors. And the restrictions are bound to change, Chavy notes. But for now, most American island dreams will need to be realized elsewhere.
Opening Cuba’s Doors
Real change will only come when the U.S. Congress lifts the decades-long embargo — a move that neither Chavy, nor Ford, expects anytime soon, thanks to this year’s presidential election. If Republican candidate Ted Cruz had his way, it would never happen.
But most folks, including firms bidding to launch U.S. flights to the island and other travel-related ventures, believe it’s just a matter of time. “What Obama is trying to do in Cuba and Iran is provide some level of sanctions relief, and hopefully that will create momentum,” says Ford.