As Communist Cuba Reforms, Capitalism Slowly Takes Hold of Its Real Estate ...

Joakim Eskildsen for TIME

Ray leads his clients through the crumbling, faded streets of central Havana, just off the city's Malecón where you can taste salt in the air coming off the Florida Straits. The 65-year-old walks with purpose, though he asks foreigners to keep a few paces behind him and talk among themselves lest police hassle him. "This next one is lovely," he says slyly turning to his clients. "It has a view of the sea from the balcony and you have all the shops nearby." In the three-bedroom, third-floor apartment, Ray shows off a "big bathroom" which has barely enough space to walk around. Typical of many Cuban homes, its furniture and electrical equipment - such as a large transistor radio - would fit nicely into a museum. The entire place will cost $30,000, though, Ray advises, it "needs work."

Ray's spiel is as practiced as estate agents the world over. But in Cuba, there's one difference: his work is illegal. For it, he will receive 10 percent of the sale price and perhaps a tip from the buyers, he suggests with a smile in the living room he is showing off.

In November 2011, the buying and selling of property on this Communist island became legal, in one of many cautious reforms enacted by the government of President Raúl Castro to open up the country's economy. Ray's commission makes him a broker and puts him on the wrong side of the law. "I do this because I make money," says Ray. Just as in nearby Venezuela, capitalism is at its most naked in countries governed by hard-left economies. Ray, like many Cubans, has found a way around the average wage of some $20 a month here. "Cubans are nothing but resilient and will always find a way to monetize things," says Ann Louise Bardach, a long-time Cuba analyst and author of Without Fidel: A Death Foretold in Miami, Havana and Washington.

Since his takeover of the presidency in 2006 from 86-year-old brother Fidel, Raúl Castro, himself 82, has cautiously attempted to grow Cuba's fledgling private sector. Yet, as with all the reforms in Cuba, the property laws are progressing "poco a poco" (little by little) offering time for the government to gauge progress and calculate its next move, "without haste," Raúl told reporters in January 2012, "so that we don't make new mistakes." Some are not impressed. "They could be done much quicker," said Cuban economist Oscar Espinosa Chepe, sitting in his small living room in Havana surrounded by books. "This government is trying to give the impression that it is changing but the country is on the edge of a cliff." Cuba's economy relies heavily on oil-rich Venezuela, which provides Havana some $10 billion annually - a significant chunk of the island's $61 billion GDP.

Ray advertises his services on Paseo del Prado, a major thoroughfare in the east of Havana. Colleagues congregate holding hand-written signs advertising homes for sale or rent. Anyone expressing interest is sneakily handed small-typed scraps of paper offering more details, a rough location for a property, the number of bedrooms and a price. Before November 2011, Cubans were legally allowed only to swap homes-however, payments were sometimes made under the table. There was of course no legal recourse should agreements go awry.

Not everyone involved in the nascent real estate industry is as rudimentary in their methods as Ray. Yosuán Crespo runs EspacioCuba from an office in Havana's more upmarket western district of Vedado. Up some stairs in his grand building are laminated signs printed just as at any other estate agent in the world, with pictures, details of the property and of course an asking price. Prices vary between around $20,000 and $250,000.

Crespo insists that his business, which opened three months after the law came into effect, is not a brokerage and says he does not receive commission. Rather, he charges clients for photographing their properties as well as preparing and publishing the adverts both at the office and online. His published fees are just a few dollars. "It's not legal to work as a broker in Cuba," says the 28-year-old. "We are not brokers and we not willing to be brokers. We don't get commission."

Supply of properties far outstrips demand. "Many of the houses we are selling right now are to people who have money from other parts of the world," says Crespo. Often the money changes hands in foreign bank accounts. Adding to excess supply is a migratory law enacted in January which allowed Cubans to obtain passports and leave the country with fewer restrictions. Meanwhile, Cuba's comparatively low average wage means that many simply do not have access to the sums of money required to purchase properties.

However, that supply and demand balance is likely to slide as foreigners realize what a huge investment opportunity Cuba represents. With prices relatively low, many imagine the price of Cuban real estate will rocket in the coming years as the island inevitably opens up to foreigners. Those who do not hold permanent Cuban residence-a requirement to purchase property-must use a Cuban spouse, friend or some other proxy as a front. This carries inherent risk but investors may see it as a worthwhile gamble.

In the meantime, the ability to buy and sell property is being exploited by some Cubans who have long been crammed into houses they do not want. Around 45,000 homes changed hands in the first eight months of last year, according to the government's latest figures. "The new law was very favorable for us," says Juan Carlos, 26, as he waits his turn at EspacioCuba looking for a place for himself, his brother and their parents.

In the crumbling apartment, Ray offers a potential customer assurances that it will be easy to renovate: "You can have anything you want in Cuba if you have money."