By Andrew Cawthorne
HAVANA, Oct 26 (Reuters) - In one of Cuba's largest joint ventures, Canadian investors and a local state firm plan a pioneering $250 million project to build beachfront timeshare and condominium units for sale to foreigners.
David McMillan, head of the new joint venture firm Cuban Club Resorts, said in an interview Monday the project to build 2,000 units within 10 years would give foreigners their first chance to buy such property on the Communist-run island.
The venture is the latest in the Cuban government's cautious opening of the real estate market to foreign capital.
It is also designed to take advantage of a fast-growing tourism industry, and an unmet foreign demand for property ownership on the Caribbean's largest island.
"There is a lot of demand and pent-up interest. We are looking to move as fast as possible," said McMillan, who was in Havana to celebrate the project launch with Cuban authorities.
He added that financing had been secured for the first phase of construction from March, which will include 354 units in Santa Maria del Mar, 11 miles (18 km) east of Havana, and 260 units in Santa Lucia in the central province of Camaguey.
The remaining units would be built over coming years at a variety of locations, including the more famous resorts of Varadero and Cayo Coco, in a mixture of timeshare, condominium and hotel and resort facilities.
Costs will be shared 50-50 between Cuba's state tourism company Gran Caribe, and a group of Canadian investors, including ex-Canadian ambassador to Cuba Mark Entwistle, who form Cuban Canadian Resorts International Inc.
"This is our country's first joint venture of this kind," said Alejandro Escobar, president of Gran Caribe and vice- president of the joint venture firm Cuban Club Resorts.
"While it is a new concept to us, we see the tremendous potential growth it offers."
The Canadian investors negotiated for nearly five years with Cuban authorities before signing the deal in September. "Initially it was something they didn't want to consider. For the first three years, they were very cautious. They didn't know anything about time-share," said McMillan.
With Americans barred from doing business in Cuba under Washington's 36-year embargo on the island, the joint venture firm's executives expect Canadians, Europeans and Latin Americans to be the main purchasers of the units.
Canada has become one of Cuba's leading trade and investment partners since the island began opening up to foreign investment at the start of the 1990s. Canadian firms are involved in the biggest of Cuba's roughly 340 existing joint ventures with foreign companies.
McMillan said all Cuban Club Resorts' potential building sites have been checked for possible problems under the U.S. Helms-Burton law, which seeks to punish foreign firms dealing with former American property seized by President Fidel Castro's government after his 1959 revolution.
He added that the project was planned with the embargo in place, but should it be lifted in the future, prompting an influx of U.S. visitors, "we will benefit from more demand."
Even with American visitors effectively prohibited under the U.S. embargo on Cuba, tourism is becoming a mainstay of the economy. While a mere 300,000 tourists a year were coming to Cuba at the end of the 1980s, that figure rose to 1.2 million last year, and is expected to reach 1.4 million in 1998, and two million by the turn-of-the-century.
00:14 10-27-98
Copyright 1998 Reuters Limited.