London & Regional, privately owned by Mr Livingstone and his brother Ian, has a £9bn property portfolio, two thirds in the UK, the rest in emerging markets. Group accounts at Companies House reported net assets of £1bn in 2013 and operating profits of £213m.
The 1.5m square foot Cuban project, called Carbonera, lies 100km north of Havana, near the Varadero beach resort. Palmares SA, a state company charged with developing Cuban golf, is the joint venture’s 51 per cent partner and contributed the land, free of property claims by nationalised owners. France’s Bouygues and Brazil’s Odebrecht, already operating in Cuba, may tender for construction.
“We’ve long liked Cuba, and signed this deal before the US talks began. I think the Cubans see it as something of a pathfinder project.”– Ian Livingstone, London & Regional co-executive chairman
“This will be a very top-end development, with a boutique hotel of 100 rooms and some 1,000 residences for sale, from villas to condominiums,” said Desmond Taljaard, London & Regional managing director. “It is part of Cuba’s drive to move up from three star tourism.”
Around 3m tourists visited Cuba last year, half the neighbouring Dominican Republic’s numbers. But an end of the US embargo could see another 3m US tourists visit, according to International Monetary Fund estimates. Mr Taljaard said Carbonera was aimed at the Canadian, European and regional markets, “with US clients one day”.
After 56 years of cold war enmity, the prospect of détente with Havana has ignited a carnival of expectations among US businesses, drawn by Cuba’s “forbidden fruit” allure – despite the difficulties of doing business there.
Carbonera, started by a Scottish entrepreneur, took eight years to reach this stage. London & Regional became a keystone partner in early 2014 and the project won Cuban cabinet approval soon after. It has since been upgraded and redesigned, and will be financed internally by the British group.
“If you are an investor focused on quarterly results and internal rates of return with immediate exits, Cuba might not be for you,” Mr Livingstone said. “But we are enthusiastic about Cuba, and committed. We are long-term investors. We build long-term relationships and we have patient capital.”