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Zanzibar's rental yields range from 8% to 15% annually, with prime beachfront properties delivering the strongest returns. The island's growing tourism sector and digital nomad influx have pushed rental yields well above most African markets, making it an attractive investment destination for property investors seeking consistent income streams.
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Zanzibar offers rental yields of 8-15% annually, with beachfront villas and short-term rentals delivering the highest returns in tourism hotspots like Nungwi and Paje.
Prime areas generate yields up to 15%, while standard properties yield 6-8%, making Zanzibar one of Africa's top rental yield destinations for property investors.
| Property Type | Rental Yield Range | Best Areas |
|---|---|---|
| Beachfront Villas | 10-15% | Nungwi, Kizimkazi, Paje |
| City Apartments | 10-12% | Stone Town, Urban Centers |
| Short-term Vacation Rentals | 12-15% | All Tourism Areas |
| Hotel/Resort Units | Up to 13% | Managed Developments |
| Standard Properties | 6-8% | Mid-market Areas |
| High-End Villas | 8-12% | Prime Locations |
| Prime 2nd-line Beachfront | 10-15%+ | Kizimkazi, Nungwi |
Fact-checked and reviewed by our local expert
Grace Makoye 🇹🇿
Manager of Operations, Zinza Real Estate
What types of properties are available in Zanzibar and how do their rental yields compare?
Zanzibar offers five main property types for rental investment, each delivering different yield ranges as of September 2025.
Beachfront villas generate the highest yields at 10-15% annually, particularly luxury estates in Nungwi, Paje, Bwejuu, and Kizimkazi. These properties command premium rental rates due to direct beach access and tourism demand.
City apartments yield 10-12% annually, with studios to 3-bedroom units performing well in Stone Town and urban centers. These properties attract expat professionals and long-term renters seeking modern amenities and proximity to business districts.
Short-term vacation rentals across all property types deliver 12-15% yields when managed professionally. Peak season occupancy rates of 75-90% in prime tourism zones drive these strong returns.
Hotel and resort units within managed developments yield up to 13% annually, benefiting from professional management and consistent bookings through resort channels.
It's something we develop in our Tanzania property pack.
Which neighborhoods in Zanzibar deliver the strongest rental demand and highest returns?
Nungwi leads Zanzibar's rental market with the highest demand and strongest yields, driven by vibrant tourism and premium pricing power.
Paje ranks second for rental returns, particularly popular with expats, kitesurfing enthusiasts, and digital nomads seeking beachfront lifestyle properties. The area maintains consistent occupancy rates year-round.
Bwejuu offers excellent value with peaceful beachfront properties delivering high occupancy rates at more affordable price points than Nungwi. Properties here achieve 10-12% yields with lower entry costs.
Michamvi and Fumba Town represent emerging areas with strong growth potential, featuring master-planned developments that attract both tourists and long-term residents.
Stone Town provides reliable urban rental income with historic charm appealing to cultural tourists and expatriate professionals working in the city center.
Jambiani works well for boutique resort investments, delivering mid-range returns of 8-10% with steady tourism flow and developing infrastructure.
How does property size affect rental yields in Zanzibar?
Property size significantly impacts rental yields in Zanzibar, with smaller units generally delivering higher yields per square meter.
Studio and 1-bedroom apartments priced $50,000-$120,000 command premium per-square-meter rents, with urban core properties reaching $3,700 per sqm and generating higher percentage yields due to strong demand from digital nomads and single professionals.
2-3 bedroom apartments and villas priced $90,000-$600,000 offer optimal value per square meter and deliver the best long-term yields for investors seeking balanced returns and appreciation potential.
Larger homes and villas above $600,000 typically yield slightly lower percentages due to oversupply in the luxury segment, though they provide stronger capital appreciation prospects and attract high-paying vacation rental guests.
Raw land plots offer yield potential realized upon development, with beachfront parcels commanding premium prices for future villa construction and rental income generation.
What are the total purchase costs including all fees and taxes in Zanzibar?
| Property Type | Price Range (2025) | Additional Costs |
|---|---|---|
| 1-2 Bedroom Apartment | $50,000 - $160,000 | 5-10% total fees |
| 3-5 Bedroom Villa | $285,000 - $1,300,000+ | Up to 10% extra costs |
| Beachfront Land Plot | $20,000 - $2,600,000+ | Survey fees $2,000-$5,000 |
| Hotel/Resort Unit | $100,000 - $500,000 | Management fees included |
| Traditional Swahili House | $30,000 - $200,000 | Restoration costs vary |
Stamp duty ranges from 1-5% of purchase price, while registration fees add another 1-2%. Notary and legal fees typically cost 3-5% of the transaction value.
Real estate agent commissions range from 5-10% of purchase price, with most transactions including both buyer and seller agent fees. Translation, banking, and ZIPA registration fees add approximately $1,000-$3,000 to total costs.
Annual property tax remains minimal at approximately $22 per property, making ongoing ownership costs very manageable compared to other international markets.
What ongoing ownership costs should I budget for my Zanzibar property?
Property maintenance costs vary significantly by size and type, ranging from $500-$3,000 annually for apartments to $5,000+ for luxury villas requiring regular upkeep and staff.
Service fees in managed developments cost $1.10-$2.00 per square meter monthly, covering landscaping, security, and common area maintenance. Concierge buildings charge up to $2.00 per sqm monthly for enhanced services.
Power backup systems in select developments add $0.09 per square meter monthly to ensure consistent electricity supply during outages.
Rental management fees consume 15-20% of gross rental revenue when using professional property management companies, though self-management eliminates this cost for hands-on investors.
Property insurance typically costs $200-$800 annually depending on property value and coverage levels, with comprehensive policies recommended for beachfront properties exposed to weather risks.
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How does financing impact real rental yields in Zanzibar?
Mortgage financing significantly affects net rental yields due to limited local lending options and higher interest rates of 8-12% annually.
Interest payments reduce cash flow and nominal yields, though leverage can enhance total returns if property appreciation exceeds borrowing costs. Most international investors find local financing challenging due to documentation requirements and currency risks.
Cash purchases deliver simpler management and higher net returns on investment, eliminating monthly loan payments and currency exchange complications that can erode rental income.
Mortgage repayments typically consume 40-60% of rental income in the first years, leaving limited cash flow for maintenance and vacancy periods. This makes cash purchases more attractive for rental income investors.
Foreign exchange fluctuations between rental income currencies and loan currencies create additional risk for leveraged investments, potentially impacting long-term yield calculations.
Should I choose short-term or long-term rentals for my Zanzibar property?
Short-term vacation rentals generate higher nightly rates of $50-$150 for apartments and $200-$1,000+ for villas, with peak season occupancy reaching 75-90% in prime areas.
Airbnb and Booking.com provide primary booking platforms, with annual yields of 10-15% achievable through professional management and strategic pricing during high tourism seasons.
Long-term rentals offer stable monthly income of $500-$1,200 for apartments and $2,000-$3,000 for villas, with lower turnover costs and reduced management intensity.
Expatriate professionals, NGO staff, and digital nomads form the primary long-term tenant base, seeking 6-12 month leases with reliable payment histories and minimal property wear.
Seasonal fluctuations affect short-term rentals more significantly, with off-season occupancy dropping to 55-70%, while long-term rentals maintain consistent income regardless of tourism cycles.
It's something we develop in our Tanzania property pack.
What are current rental prices for different property types in Zanzibar?
| Property Type | Short-term Rate (per night) | Long-term Monthly Rate |
|---|---|---|
| Studio/1-bedroom Apartment | $50 - $150 | $500 - $800 |
| 2-bedroom Apartment | $90 - $160 | $800 - $1,200 |
| 3-4 Bedroom Villa | $200 - $1,000+ | $2,000 - $3,000 |
| Swahili House (rural) | $30 - $80 | $800 - $1,500 |
| Beachfront Bungalow | $80 - $300 | $2,000+ |
| Luxury Beachfront Villa | $500 - $1,000+ | $3,000 - $5,000+ |
| Nungwi Average (Airbnb) | $99 - $286 | Occupancy 65-85% |
Nungwi commands the highest rental rates across all property types, with luxury beachfront villas reaching $1,000+ per night during peak season and maintaining 65-85% annual occupancy rates.
Stone Town properties typically rent for 10-20% less than beachfront locations but offer more consistent year-round demand from business travelers and expatriate workers.
What tenant profiles are most common in Zanzibar's rental market?
Expatriate staff and NGO professionals form the largest long-term rental segment, seeking modern apartments with reliable internet and proximity to Stone Town offices.
Digital nomads and remote workers increasingly drive short and medium-term rental demand, prioritizing beachfront locations with strong WiFi connectivity and co-working spaces.
International tourists dominate short-term vacation rentals, with European and American visitors seeking luxury accommodations during peak season months of June-September and December-January.
Retirees and lifestyle renters choose long-term beachfront properties, often staying 6-12 months annually and returning seasonally to the same properties.
Families working in Stone Town or relocated professionals prefer 2-3 bedroom apartments and houses with modern amenities, security features, and proximity to international schools.
Tenant priorities consistently include reliable internet connectivity, modern amenities, proximity to beach or town centers, and comprehensive security systems for peace of mind.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Tanzania versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What are typical vacancy rates across different areas and property types?
Prime tourism zones including Nungwi, Paje, and Kendwa achieve 75-90% occupancy during high season with off-season averages of 55-70%.
Urban apartments in Stone Town maintain 65-80% annual occupancy rates, benefiting from steady expatriate and business traveler demand throughout the year.
Luxury managed hotel units report occupancy rates up to 92%, while holiday homes average 65-85% annual occupancy depending on management quality and marketing reach.
Standard apartments and houses across mid-market areas achieve 62-75% annual occupancy, with performance varying significantly based on property condition and local amenities.
Beachfront properties consistently outperform inland locations by 10-15 percentage points in occupancy rates, reflecting tourist preferences for ocean access and views.
Professional property management typically improves occupancy rates by 15-20% compared to owner-managed properties through better marketing, pricing, and guest services.
How have rental yields changed over the past five years in Zanzibar?
Rental yields increased significantly from 6-8% in 2019 to 10-15% in 2025 across prime areas, driven by explosive tourism growth and digital nomad influx to the island.
Property prices appreciated 8-12% annually in main areas, though some luxury oversupply segments experienced yield compression as supply outpaced demand in the high-end market.
The tourism recovery post-2022 accelerated rental rate growth, with short-term vacation rental prices increasing 15-25% annually in popular destinations like Nungwi and Paje.
Digital nomad demand since 2020 created new rental segments for medium-term stays (1-6 months), filling gaps between traditional short and long-term rental markets.
Comparing 2024 to 2025, occupancy rates improved slightly while luxury sector rates faced pressure from increased supply, though standard properties maintained steady or rising yields.
It's something we develop in our Tanzania property pack.
What is the forecast for Zanzibar rental yields over the next decade?
| Time Period | Predicted Yield Range | Key Market Drivers |
|---|---|---|
| 1 Year (2026) | 10-15% (prime areas) | Tourism growth, strong demand |
| 5 Years (2030) | 8-13% | Market maturation, selective growth |
| 10 Years (2035) | 7-10% | Increased supply, stable demand |
| Luxury Segment | Gradual compression | Supply increases faster than demand |
| Standard Properties | Steady performance | Consistent rental demand growth |
| Tourism Infrastructure | Positive impact | Airport expansion, new resorts |
| Regional Comparison | Above average | Outperforming East African markets |
Zanzibar ranks 7th continent-wide for highest rental yields at 12-15%, significantly ahead of Dar es Salaam (2%) and comparable to Johannesburg (10-13%).
The island is likely to maintain yields above African and East African averages for the next decade, supported by tourism infrastructure development and international investor interest.
Lagos currently offers the highest African yields at 43-46% but with much higher volatility, making Zanzibar attractive for investors seeking strong returns with moderate risk profiles.
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 offers exceptional rental yield opportunities for property investors, with returns of 8-15% annually placing it among Africa's top investment destinations.
Strategic property selection in prime tourism areas like Nungwi and Paje, combined with professional management, maximizes both rental income and long-term appreciation potential.
Sources
- TheAfricanvestor - Zanzibar Property Guide
- InvestZanzi - Real Estate Investment Guide
- TheAfricanvestor - Price Forecasts
- Shivo Tanzania Investment Guide
- Vela Zanzibar Investment Statistics
- Vela Zanzibar Market Outlook
- Vela Zanzibar Investment Guide
- IPP Media - Property Returns Report
- Property Hub Tanzania - Land Buying Guide
- TheAfricanvestor - Best Areas Guide