Head of Cuba’s golf projects on the quest to become a golf destination

Email this to someoneShare on FacebookTweet about this on TwitterShare on Google+

Varadero’s 18-hole golf course.

Taking a cue from its Caribbean neighbors, Cuba has ambitious plans to become a golf destination. Although the island now has just one 18-hole course in Varadero and a nine-hole one in Havana, it has plans for up to 30 more courses in the next decade or so—all linked to major tourism developments featuring hotels and vacation homes.

Achieving this goal will take some effort. Major golf projects have been touted for years, but not yet broken ground. Cuba Trade spoke with engineer Jorge Luis Acosta, director general of state company Palmares, on Cuba’s golf plans and why they’re likely to move forward now. Palmares handles tourism services other than hotels including restaurants, gift shops, night clubs, and now, massive golf-real estate developments. The following interview, conducted in Spanish, has been translated and edited for space and clarity.

Jorge Luis Acosta, director general of Palmares.

What is the status of golf projects in Cuba?

We now have 13 real-estate projects with golf components that have foreign partners selected for their development. Of course, there will be other foreign partners involved too, such as construction companies and hotel managers.

We plan to have all 13 projects set up as joint ventures by the end of 2018. So far, we have three joint ventures established: Bellomonte, located 20 minutes from Havana by Playas del Este; Carbonera in the Havana-Matanzas corridor, some 26 kilometers [16 miles] from Varadero; and Punta Colorada, announced in May at the Cuba International Tourism Fair, which is in the far west of Pinar del Rio province. We plan to set up eight more joint ventures this year, and next year, we’ll have two more to finalize.

The projects we’ve been discussing haven’t been frozen in time. There’s a schedule. These 13 projects together run $14.3 billion. They’re very complicated. Just their first phase takes us through 2025. Because they’re so complex, negotiations with foreign partners have been taking time. And frankly, we Cubans have no experience in this type of development, so we’re on a learning curve.

Today, Bellomonte and Carbonera are in the pre-investment stage. We’re doing the feasibility studies.

When will you break ground on those two projects?

We hope later this year.

Tell me more about the three projects approved.

The largest is Punta Colorada. It spans more than 3,000 hectares [more than 7,000 acres] and has seven golf courses. Just the first phase will require $3 billion in financing by 2020. Punta Colorada will revolutionize business for Palmares. In addition to golf, it will have a marina, a retail complex, and more than 20,000 residential units. It’s the most ambitious project we have in the country.

Who is the foreign partner for Punta Colorada?

A Spanish company called Havana Golf will handle the golf development. Later, we will sign contracts for project management, sales and marketing, hotel management, marina management and other aspects of the project. This will be done in phases over some 25 years.

And where will the $3 billion come from? Hasn’t funding been a sticking point?

That $3 billion won’t come in one shot. The joint venture gives Cuba 51 percent and the foreign partner 49 percent ownership. There’s a timetable for what each partner gives. For example, Cuba now has to provide millions of dollars worth of surface rights to the land, and the foreign partner will give an amount mutually agreed upon to fund feasibility studies and other costs for this initial phase.

And where will the rest of the $3 billion come from? Funding has been a problem in Cuba, even for foreign companies.

One of the most complicated parts in forming these joint ventures is verifying the financial and economic capacity of the foreign partner. For Cuba to form a joint venture, we first do an investigation into where the foreign partner gets its money and how solvent the partner is. That’s one of the reasons that these negotiations take time.

For the golf projects, we’ve also had to make sure that we can offer the surface rights to the foreign partner. At Bellomonte, for example, we paid CUC 72 million [about $72 million] to make sure the land rights are clean, which involved helping move companies operating there and relocating individuals living on those parcels. The law says that for legal residents the joint venture must pay to build a similar home elsewhere.

So, if you’ve verified their creditworthiness, why haven’t these projects started?

The issue hasn’t been funding. It’s been negotiations, surface rights, the learning curve… We’re working on projects for 30 golf courses.

How does the real-estate component of these golf developments work? What are the terms for foreigners to buy properties in Cuba?

Recent laws and regulations allow foreigners to have [leasing] rights for properties for 99 years, up from 75 years before. The sale of homes and apartments in these projects is legal. You become the owner for 99 years. You can sell, exchange, barter and even inherit that property.

And what happens after 99 years?

You’re the owner in perpetuity.

What do you think will be the prices for the vacation homes, and who will be the buyers?

That depends on what the feasibility studies, and on what the sales and marketing studies show.

How will Cuba differentiate itself from Mexico, the Dominican Republic, and other golf destinations?

One differentiator will be nature – our beaches and national parks.

Cuba has no real history of golf, at least in recent years.

The Capdevila course in Havana is from 1945. It’s the oldest in the country. But you’re right, golf is new for us. It’s a revolution. One thing we want for the future are schools to teach and practice golf, because golf is not as well known or as well publicized as baseball, soccer, or other sports.

So, what’s the biggest challenge to Cuba becoming a golf destination?

Speed. We need to work quickly.

Email this to someoneShare on FacebookTweet about this on TwitterShare on Google+

, ,

No comments yet.

Leave a Reply