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Zanzibar's rental market offers diverse investment opportunities with average rents ranging from $400-$2,000 monthly for standard properties.
Prime beachfront areas like Nungwi and Paje command premium rents of $800-$5,000 monthly, while suburban districts offer more affordable options at $300-$700 monthly. Short-term rental properties generate significantly higher yields of 12-15% compared to long-term rentals at 5-8%, making vacation rental investments particularly attractive for investors targeting tourist markets.
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Zanzibar rental properties generate 5-15% annual yields depending on location and rental strategy, with beachfront short-term rentals outperforming long-term suburban properties.
Prime tourist areas command 2-3 times higher rents than local neighborhoods, while additional costs including utilities and taxes add approximately 15-20% to base rental prices.
| Area Type | Average Monthly Rent | Rental Yield | Target Tenant |
|---|---|---|---|
| Prime Beachfront (Nungwi, Paje) | $800-$5,000 | 12-15% | Tourists, Expats |
| Stone Town Center | $400-$800 | 6-8% | Expats, Business |
| Suburban Areas | $300-$700 | 4-6% | Local Families |
| Luxury Villas | $2,000-$10,000 | 8-12% | High-end Tourists |
| Commercial Units | $800-$2,500 | 5-8% | Businesses |
Fact-checked and reviewed by our local expert
Grace Makoye 🇹🇿
Manager of Operations, Zinza Real Estate
What's the current average rent across Zanzibar and how does it vary by neighborhood?
As of September 2025, the average rent for a standard 85 m² furnished apartment in Zanzibar's expensive areas reaches approximately 1,126,910 Tanzanian Shillings monthly, equivalent to $437.
Prime beachfront neighborhoods like Nungwi, Paje, and Kiwengwa command the highest rental prices, ranging from $800 to $2,000 monthly for modern apartments and villas. These areas attract expats and tourists seeking proximity to pristine beaches and developed infrastructure.
Suburban and non-beach districts offer more affordable rental options, typically ranging from $300 to $700 monthly for apartments and traditional Swahili houses. Stone Town apartments start at 393,000 TSh for one-bedroom units and 524,000 TSh for three-bedroom properties.
Expats and long-term renters tend to concentrate in Paje, Nungwi, and Stone Town due to amenities and accessibility, while local families prefer Bububu and Fumba for better value and community connections.
The rental price variation reflects Zanzibar's diverse geography and development levels, with beachfront properties commanding premiums of 200-300% over inland alternatives.
How do rental prices break down by property type?
Rental prices in Zanzibar vary significantly based on property type and target market positioning.
Apartments typically range from $400 to $1,000 monthly, concentrated primarily in urban areas and expat-friendly neighborhoods. These properties often feature modern amenities and reliable utilities, making them popular among working professionals and small families.
Villas and beachfront homes represent the premium segment, commanding $2,000 to $10,000 monthly in top neighborhoods like Nungwi, Paje, and Kiwengwa. These properties often include private pools, direct beach access, and luxury furnishings targeting high-end tourists and wealthy expats.
Commercial units in prime tourist locations such as Paje and Stone Town rent for $800 to $2,500 monthly, with some establishments operating under turnover-based leases for shops and restaurants. These properties benefit from high foot traffic and tourist spending patterns.
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What's the typical rent per square meter for different property sizes?
Rental rates per square meter in Zanzibar reflect location premiums and property quality standards as of September 2025.
City center apartments average $6 to $11 per square meter monthly, while suburban and coastal properties range from $4 to $7 per square meter monthly. These rates apply to standard residential properties with basic amenities and utilities.
Beachfront villas command premium rates exceeding $20 per square meter monthly for exclusive listings with direct ocean access and luxury amenities. These properties often feature private beaches, infinity pools, and concierge services.
Suburban areas offer the most affordable rates at $1,100 per square meter for purchase, translating to rental rates of $4 to $7 per square meter monthly. These areas provide good value for families and long-term residents prioritizing space over location.
Property size significantly impacts per-square-meter pricing, with smaller units typically commanding higher rates due to fixed costs and premium location factors.
What's the total cost of rent including all fees and expenses?
The total rental cost in Zanzibar extends well beyond base rent, incorporating various fees and utilities that add 15-20% to monthly expenses.
| Cost Category | Monthly Amount (TSh) | Monthly Amount (USD) |
|---|---|---|
| Utilities (85m² apartment) | 167,686 | $65 |
| Internet Connection | 106,438 | $41 |
| Annual Ground Rent (per m²) | 0.90 | $0.35 |
| Agency Fees (Long-term) | 8-15% of total rent | 8-15% of total rent |
| Property Management (Short-term) | 20-30% of rental income | 20-30% of rental income |
| Local Property Tax | Under 12% of rental income | Under 12% of rental income |
Annual ground rent for foreign leaseholds costs $0.35 per square meter in urban areas, while local taxes remain relatively low at under 12% of rental income for non-residents.
Agency fees range from 8-15% of total rent for long-term arrangements, while short-term rental management commands 20-30% of gross rental income due to higher service requirements and marketing needs.
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How does financing affect rental returns and what are common mortgage terms?
Financing significantly impacts rental returns in Zanzibar's real estate market, with mortgage terms varying based on buyer nationality and property type.
Typical mortgage rates average 10% annually fixed for 20-year terms, which can compress net rental yields due to higher interest costs compared to developed markets. However, leveraged investments may amplify returns for investors benefiting from property appreciation.
Loan-to-value ratios range from 60-80% for foreign investors and 70-90% for Tanzanian nationals, with some restrictions applying to leasehold properties. These ratios require substantial down payments but provide access to larger investment opportunities.
Financing costs must be carefully calculated against projected rental income, as the 10% interest rate can consume significant portions of gross rental yields, particularly for long-term rental properties generating 5-8% annual returns.
Investors leveraging mortgages benefit most from high-appreciation areas and short-term rental strategies that generate 12-15% yields, providing sufficient margin above financing costs.
What are the main profitability differences between short-term and long-term rentals?
Short-term and long-term rental strategies in Zanzibar offer distinctly different risk-return profiles and operational requirements.
Short-term rentals through platforms like Airbnb generate substantially higher income potential, with top listings earning median monthly revenues of $1,527 and premium beachfront properties reaching $4,000 monthly during peak seasons.
Long-term rentals provide lower gross yields of 5-8% but require significantly less management effort and experience lower vacancy rates. These arrangements appeal to investors seeking passive income with minimal operational involvement.
Short-term rental yields reach 12-15% in prime tourist areas like Paje and Nungwi, with occupancy rates averaging 75% during peak season. However, these properties require professional management, dynamic pricing, and constant marketing efforts.
Vacancy patterns differ significantly between strategies, with short-term rentals experiencing seasonal fluctuations while long-term properties maintain steadier occupancy with typical vacancy rates of 8-12%.
Can you provide specific rental price examples for different property types?
Rental prices in Zanzibar vary dramatically based on property size, location, and target market positioning.
- Small apartments (1-bedroom): Range from $400-$700 monthly in upscale beach areas, 262,000 TSh ($102) in suburban locations, and 393,000 TSh ($153) in city center Stone Town
- Mid-sized family homes (3-bedroom): Command $800-$1,200 monthly in beachfront areas, 393,000 TSh ($153) in suburban districts, and 524,000 TSh ($203) in central Stone Town
- Luxury villas: Premium beachfront properties rent for $2,000-$5,000 monthly in tourist areas, $1,500+ in suburban locations, and up to $10,000 for direct beachfront access with luxury amenities
- Commercial units: Tourist-area shops and restaurants rent for $800-$2,500 monthly, with some operating under revenue-sharing arrangements
- Budget accommodations: Basic local housing starts at $200-$300 monthly in non-tourist areas, targeting local workers and budget-conscious renters
These price ranges reflect September 2025 market conditions and include fully furnished properties with standard utilities and amenities.
Who are the main renter profiles and what do they seek?
Zanzibar's rental market serves three distinct tenant demographics with varying preferences and budget ranges.
Expats represent a premium segment seeking modern amenities, secure neighborhoods, proximity to beaches or Stone Town, and reliable internet connectivity. These tenants typically work in tourism, NGOs, or remote positions and prioritize lifestyle amenities over cost savings.
Tourists dominate short-term rentals, seeking beachfront access and vibrant areas like Paje, Nungwi, and Kendwa. They prefer fully furnished properties with immediate access to restaurants, water sports, and nightlife, often booking through international platforms.
Local residents prioritize affordability and practical considerations, favoring housing in developing districts with proximity to work and schools. This segment typically rents unfurnished properties and negotiates longer-term arrangements for price stability.
Each demographic drives demand in different market segments, with expats and tourists supporting premium pricing while locals sustain the volume rental market in suburban areas.
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What are current vacancy rates across different areas and property types?
Vacancy rates in Zanzibar fluctuate significantly based on location, property type, and seasonal tourism patterns.
Tourist and expat neighborhoods experience vacancy rates as low as 10% during high season for short-term rentals, with occupancy rates measured between 24-62% by short-term rental analytics platforms. These areas benefit from consistent international visitor flow and established tourism infrastructure.
Long-term rental properties maintain typical vacancy rates of 8-12%, with higher rates of 15%+ in off-beach or less popular suburban areas. Properties in these locations face longer marketing periods and require competitive pricing to attract tenants.
Entry-level and poorly managed properties experience vacancy rates exceeding 15%, often due to inadequate maintenance, poor marketing, or unrealistic pricing expectations. These properties struggle to compete with professionally managed alternatives.
Seasonal variations significantly impact short-term rental occupancy, with peak tourist seasons driving occupancy rates above 75% while low seasons may see rates drop below 40% in some areas.
What rental yields can owners expect across different areas and property types?
Rental yields in Zanzibar vary significantly based on location, property type, and rental strategy implementation.
| Area Type | Short-term Rental Yield | Long-term Rental Yield | Best Strategy |
|---|---|---|---|
| Beachfront Premium | 12-15% | 6-12% | Short-term tourism |
| City Center Stone Town | 5-8% | 4-7% | Mixed strategy |
| Suburban Areas | 4-6% | 3-6% | Long-term local |
| Tourist Areas (Paje, Nungwi) | 12-15% | 8-10% | Short-term Airbnb |
| Commercial Properties | N/A | 5-8% | Business leases |
Beachfront properties consistently deliver the highest yields, particularly when operated as short-term vacation rentals targeting international tourists during peak seasons.
Suburban areas provide steady but lower returns, appealing to investors seeking passive income with minimal management requirements and stable long-term tenants.
How have rents and yields changed over the past five years and compared to last year?
Zanzibar's rental market has experienced consistent growth over the past five years, with annual rent increases averaging 5-7% across all property segments.
Prime beachfront areas have seen the most dramatic appreciation, with annual increases reaching 10-15% for premium properties, especially luxury beachfront villas and high-end short-term rentals. These increases reflect growing international tourism and limited supply of premium properties.
Compared to 2024, annual rent growth accelerated to over 7% across all segments, with luxury properties and short-term rental markets outperforming traditional city apartments. This acceleration reflects post-pandemic tourism recovery and increased international investment interest.
Rental yields have remained relatively stable despite price increases, as demand growth has matched supply expansion in most market segments. Short-term rental yields continue to outperform long-term alternatives by significant margins.
The five-year trend indicates sustained market confidence and growing recognition of Zanzibar as an investment destination, supported by government policies encouraging foreign investment and tourism development.
What are the smartest investment choices and market forecasts for the next 1, 5, and 10 years?
The most strategic investment opportunities in Zanzibar currently focus on beachfront villas and short-term rental properties in Nungwi, Paje, and Kendwa, where Airbnb-style properties consistently outperform long-term rental alternatives.
For the next 12 months, continued growth is expected across prime and short-term rental markets, driven by expanding tourism initiatives and new holiday resort developments opening throughout 2026. Tourism recovery momentum supports optimistic near-term projections.
The five-year forecast indicates strong appreciation potential in beach areas, with annual rental yields likely stabilizing at 12-15% for short-term rentals while mainstream apartments and houses may plateau at 7-8% as supply increases meet growing demand.
Over the next decade, Zanzibar is positioned to maintain above-average returns compared to regional competitors, with pro-investor government policies, expanding tourism infrastructure, and continued economic development supporting sustained growth.
Zanzibar's rental yields often double those seen in comparable African beach destinations and consistently exceed Tanzania mainland markets, making it an attractive long-term investment destination.
It's something we develop in our Tanzania property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Zanzibar's rental market offers exceptional opportunities for investors targeting tourism and expat segments, with prime beachfront properties delivering yields of 12-15% through short-term rental strategies.
The market's growth trajectory, supported by government investment policies and expanding tourism infrastructure, positions Zanzibar as a premier destination for real estate investment in East Africa.
Sources
- Expatistan - Cost of Living in Zanzibar
- Numbeo - Property Investment in Zanzibar
- Coldwell Banker - Zanzibar Rent Prices 2025
- TheAfricanVestor - Zanzibar Property
- Coldwell Banker - Zanzibar Rental Roadmap
- TheAfricanVestor - Tanzania House Prices
- TheAfricanVestor - Zanzibar Price Forecasts
- Exiap - Cost of Living in Tanzania
- Vela Zanzibar - Buying Property Guide
- KPMG - Tanzania Budget Brief 2025