Today's Opinions, Tomorrow's Reality 

Invading the Next Frontier
The Coming Boom in Cuban Real Estate

By David G. Young

Cancun, Mexico, September 28, 2004 --  

Thirty years after the invention of this resort city, the development of Mexico's Caribbean coastline is nearing completion. The international airport built to bring millions of tourists to a string of hotels along Cancun's sandy barrier island, now serves an area that goes far beyond. For 80 miles south of the city, a nearly unbroken string of pristine beaches and turquoise waters beckons visitors with luxury resorts and condo developments.

In recent years, sprawling new all-inclusive resorts have popped up on nearly every undeveloped beachfront all the way to the marshy coastline that begins halfway to the border of Belize. The plaid-pant filled golf courses of these resorts have replaced the wildlife-filled mangroves that once backed the powdery white sand dunes.

The maturing of the Mexican Riviera follows similar booming growth patterns on North America's beachfronts, starting with Atlantic City on the American east cost in the late nineteenth century. The early resort towns of Cape May, Wildwood and Ocean City soon spread to cover the mid-Atlantic region. Florida's coast opened to development in the early 20th century, followed by California 60 years ago, and more recently the smaller Caribbean islands. With a wealthy beach-loving North American population ever-seeking new vacation property, a new frontier is always around the corner.

This next frontier, without a doubt, will be Cuba. With probably less than 20 years left in Fidel Castro's life, the time for smart developers is now. Hundreds of miles of Caribbean waterfront -- more than the entire coastline of Florida -- are locked up in a communist time warp, like a freeze-dried gourmet meal for beachfront developers. With the closest of these beaches only 90 miles away from Florida, the convenience of the properties is unrivaled amongst undeveloped areas.

While Castro may not cooperate with the planning, there is no reason he needs to. Commercial satellite photography, available since the launch of the Ikonos satellite four years ago, offers all the resolution needed to generate development maps for the post-Castro real estate boom. With all land currently owned by the socialist dictatorship, negotiations for transfer of title will be simple. Ready-to-go development maps will give speculators the ability to swoop in on an unsuspecting and naive post-Castro interim government and cherry-pick the best properties before most Cubanos even know the regime has changed.

But why wait for the regime to fall on its own? After an uncontrolled revolution, developers would be at the mercy of whoever grabs power -- adding a somewhat random element that may not maximize returns on Cuban beachfront properties. There is always a chance that a post-Castro leader may not be a reliable development partner. Given the enormous sums of money to be made, as well as the communist island's ongoing financial troubles and lack of military readiness, real estate developers should consider speeding regime change along.

Earlier this year, a group of 70 mercenaries was arrested in Zimbabwe, allegedly en route to overthrow the oil-rich West African dictatorship of Equatorial Guinea. The alleged plot was foiled largely due to the opposition of the Zimbabwean and South African governments. No such trouble would befall a similar plot against Cuba -- the United States would most certainly stand pleasingly aside. The Cuban missile crisis forced the United States to promise the Soviets it would not invade the island over 40 years ago. Mercenaries backed by real estate developers, however, are under no such constraints. Given that Zimbabwe has released many of the alleged West African plotters, a team may already be available.

When augmented by troops from the exile community in Miami, the oil developers' loss in West Africa can be turned into the real estate developers' gain in Cuba. Viva la nueva revolucion. The next frontier awaits.