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By Procore Editorial staff
June 17, 2016
Author: MICHAEL WEISSENSTEIN, Associated Press
JIBACOA, Cuba (AP) — Twenty years ago a Canadian developer won permission to develop 2.5 miles of lush green ridge line and pristine Cuban beaches, a gorgeous strip of heaven lapped by the emerald waters of the Florida Straits just 40 miles (65 kilometers) from Havana; a developer’s daydream. It seemed almost too good to be true. Guess what?
Year after year, the plan failed to materialize. But when, in 2014, the U.S. and Cuba historically talked through their differences, tourism suddenly boomed in the once-isolated island nation. Now, Montreal-based developer 360 VOX says it is preparing to break ground on a $1.4 billion development with 27 holes of golf, four luxury hotels, and 2,700 high-end villas and apartments for sale to foreigners. A country that was once shrouded in cold-war secrecy is about to join the community of vacation destinations.
"Some people will want to go to Eagle's Peak to see the sunrise and have a yoga class where they can salute the sun," project head Guy Chartier said, looking out over miles of beach dotted with pre-revolutionary stone houses and Soviet-era public campgrounds. "Others will want to get a round of golf going."
Elsewhere along the investment-fertile Cuban coast, a Chinese firm is preparing to build a golf resort, and a British firm plans to break ground by the end of the year on an 18-hole golf and beach resort with 1,000 apartments and villas.
As Cuba fever seizes investors, communist functionaries and global corporations are hoping to change the island's reputation as a place where investment projects go to die. A year and a half into normalization with the U.S., Cuba faces either an exciting new era of foreign investment or another in a string of false starts.
Despite the Dec. 2014 reconciliation, however, the U.S. trade embargo on Cuba prevents most investment from the U.S. and makes it difficult for most other countries. Add to that a bureaucracy that can take months to move a single document from one ministry to another, and it's no wonder that projects linger for years, even decades, without much progress.
"They hear about the U.S. normalization and they get a sense of, 'Wow, maybe Cuba really is now opening up,'" said Richard Feinberg, author of the new book "Open for Business: Building the New Cuban Economy." ''Then they visit and they find that many of the same obstacles to actually finalizing deals remain in place."
In Jibacoa, privately held 360 VOX hopes to end 20 years of waiting by starting work in the second half of 2017.
"One thing you need to have here is patience," Chartier said. "Companies shouldn't come to Cuba if they don't have a long-term view."
President Barack Obama's loosening of the half-century-old embargo is allowing Alabama-based startup Cleber LLC to build a small tractor factory in the Mariel zone—the first U.S. factory approved in Cuba since the island's 1959 revolution. Despite a warm reception by Cuban officials, the company is still awaiting the paperwork granting initial approval from the communist government.
"It's a tedious process but it's under a lot of scrutiny and I do understand that they're trying to take the time to do it," company founder Saul Berenthal said.
The total new projects do not approach the more than $2 billion a year in foreign investment Cuba says it needs to drag itself out of a decades-long cycle of anemic productivity and over-dependence on imports.
The fastest-moving projects on the island appear to be those built by GAESA, the military-run conglomerate that owns more than a third of Cuba's 50,000 to 60,000 hotel rooms and plans to build more than 30,000 more by 2030, most in all-inclusive beach resorts.
At Cuba's military-run main port, container ship traffic has risen more than 40 percent since 2014, when operations moved from Havana to Mariel, a gritty industrial town west of the capital. Ship traffic is expected to rise again by next year as the port completes a long overdue dredging of the entrance to allow in today’s outsized container ships, the seafaring giants that have also inspired a rebuild of the Panama Canal. The activity around the old port complex may the surest bellwether of coming change for the business and development climate in Cuba.
"There's nowhere else I'd rather be right now," said Charles Baker, the head of the port for PSA International, a Singapore-based ports operator that runs Mariel on behalf of the military.
Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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