How is the property market forecast in Dar es Salaam?

Authored by the expert who managed and guided the team behind the Tanzania Property Pack

Yes, the analysis of Dar es Salaam's property market is included in our pack

Who is the author of this content?

THE AFRICANVESTOR

A team specialized in real estate investing in African countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Dar es Salaam. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At The African Investor, we explore the Tanzanian real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Dar es Salaam, Dodoma, and Arusha. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

Fact-checked and reviewed by our local expert

✓✓✓

Grace Makoye 🇹🇿

Manager of Operations, Zinza Real Estate

Grace Makoye is your go-to real estate expert in Dar es Salaam. As Manager of Operations at Zinza Real Estate, she helps clients secure prime commercial and residential properties with ease. Want the best deals? She's got you covered.

What has been the average annual price growth for residential properties in Dar es Salaam over the past five years?

Dar es Salaam's residential property market has delivered a steady 7% annual price growth over the past five years.

This growth rate has consistently outperformed Tanzania's inflation rate, making real estate one of the country's best-performing asset classes. The 7% appreciation reflects strong underlying demand from rapid urbanization and limited housing supply relative to population growth.

Prime districts like Masaki and Oyster Bay have experienced even stronger appreciation, often reaching 8-10% annually, while outer suburban areas have seen more moderate growth in the 5-6% range. The consistent nature of this growth pattern indicates a mature market with solid fundamentals rather than speculative bubbles.

As of September 2025, this trend appears sustainable given the demographic pressures and ongoing infrastructure development throughout the city.

It's something we develop in our Tanzania property pack.

How do current apartment prices per square meter compare with standalone house prices across central districts like Masaki and Oyster Bay versus outer suburbs?

Apartment prices in Masaki and Oyster Bay range from USD 1,400 to USD 1,800 per square meter for new luxury units.

Standalone houses in these prime central districts start from approximately USD 150,000, though prices vary significantly based on size, condition, and exact location. These houses typically offer larger living spaces and private compounds, making them attractive to families and high-net-worth individuals.

Outer suburbs present dramatically different pricing structures. In developing neighborhoods like Mikocheni and Msasani, apartments typically cost USD 120,000 to USD 285,000 for two to three-bedroom units. Even more affordable options exist in areas like Mbezi Mwisho, where standalone houses can be found for as low as USD 36,000.

The price differential between central and suburban areas reflects infrastructure quality, proximity to business districts, and overall neighborhood maturity. Central districts command premium pricing due to established amenities, reliable utilities, and shorter commute times to major employment centers.

What is the rental yield percentage in prime areas compared to emerging neighborhoods, and how has it shifted year-on-year?

Prime neighborhoods like Masaki and Oyster Bay currently offer rental yields ranging from 6% to 9% annually.

These yields have remained remarkably stable over recent years, indicating a balanced supply-demand dynamic in premium locations. The consistency reflects strong tenant demand from expatriates, diplomatic staff, and affluent locals who prioritize location and amenities over cost savings.

Emerging neighborhoods typically generate lower rental yields of 4% to 6%, though this gap may narrow as infrastructure improvements increase their attractiveness. Some peripheral regions have actually seen yield declines year-on-year due to new supply coming online faster than tenant demand.

The stability in prime area yields contrasts with more volatile performance in emerging locations, where yields fluctuate based on infrastructure development timing and speculative construction activity. Investors focusing on consistent returns favor established areas, while those seeking capital appreciation often target emerging neighborhoods despite lower initial yields.

How many new housing units are expected to be delivered in the next three years, and what proportion are high-end versus affordable?

Approximately 130,000 new housing units are anticipated annually over the next three years in Dar es Salaam.

Housing Segment	Annual Units	Target Market
Affordable Housing	85,000-90,000	Low-middle income families
Mid-Market Units	30,000-35,000	Middle-class professionals
High-End Properties	10,000-15,000	Affluent buyers and expatriates
Luxury Developments	3,000-5,000	Ultra-high net worth individuals
Government Housing	15,000-20,000	Public sector employees
Mixed-Use Projects	8,000-12,000	Various income levels
Student Housing	5,000-8,000	University students

High-end units constitute a minority of new supply, with the vast majority targeting affordable and mid-market segments. This distribution reflects government policies promoting affordable housing and developers responding to rapid urbanization among lower and middle-income populations.

What is the current average occupancy rate for both residential and commercial properties, and how does it differ by location?

Residential properties in key districts maintain occupancy rates of 85% to 90%.

These strong occupancy levels reflect robust demand in established neighborhoods with good infrastructure and amenities. Prime locations like Masaki, Oyster Bay, and Upanga consistently achieve occupancy rates at the higher end of this range due to limited supply and strong tenant demand.

Commercial property occupancy follows similar patterns in premium locations, though rates can dip below 80% in newly built or peripheral areas. Office buildings in central business districts typically maintain 85-90% occupancy, while retail spaces in established shopping areas achieve comparable rates.

Emerging neighborhoods and outer suburbs experience more variable occupancy rates, often ranging from 70-85% depending on infrastructure development status and transportation connectivity. New developments in these areas may take 6-12 months to achieve stabilized occupancy levels.

The overall upward trend in occupancy rates indicates a tightening rental market, which supports continued rent growth and property value appreciation across the city.

How have mortgage interest rates in Tanzania evolved recently, and what percentage of property purchases in Dar es Salaam are financed through mortgages?

Mortgage interest rates in Tanzania currently range from 16% to 19% per annum and have stabilized at these elevated levels.

These high rates significantly limit mortgage accessibility for most Tanzanian buyers, making cash purchases the predominant transaction method. The rates reflect Tanzania's monetary policy stance, inflation concerns, and banking sector risk assessments of real estate lending.

Less than 20% of property transactions in Dar es Salaam are mortgage-financed, with the vast majority of buyers relying on cash or private credit sources. This low mortgage penetration rate constrains market liquidity and makes the market heavily dependent on buyers with substantial cash reserves or alternative financing arrangements.

The limited mortgage market also means that property price movements are less sensitive to interest rate changes compared to markets with higher financing penetration. However, any future reduction in mortgage rates could significantly expand the buyer pool and accelerate price appreciation.

What is the median time on market for a property listing before it sells or rents, and how does that compare to three years ago?

Properties in central, prime areas typically sell within 2 to 3 months of listing.

Outer suburbs and less liquid market segments require 5 to 6 months on average before finding buyers. This extended timeline reflects fewer active buyers in peripheral areas and the cash-heavy nature of most transactions, which limits the pool of qualified purchasers.

Rental properties in core districts often secure tenants within 6 weeks, significantly faster than sales transactions. The rental market benefits from more diverse tenant profiles, including expatriates, professionals, and local families who don't require the substantial cash outlays needed for purchases.

Three years ago, median times were notably higher across all segments. Sales transactions often took 4-6 months even in prime areas due to lower overall demand and less developed infrastructure. The improvement reflects growing market maturity, better marketing channels, and increased buyer confidence in Dar es Salaam's property market.

It's something we develop in our Tanzania property pack.

How does the population growth rate of Dar es Salaam, projected to surpass 10 million by 2030, translate into estimated annual housing demand?

Dar es Salaam gains approximately 130,000 new urban households annually, creating direct housing demand pressure.

The city's population growth to over 10 million by 2030 represents one of the world's fastest urbanization rates. This demographic expansion includes both natural population growth and rural-to-urban migration as people seek economic opportunities in Tanzania's commercial capital.

Each new household typically requires independent housing within 12-18 months of formation, whether through purchase or rental. The 130,000 annual household formation rate roughly matches the projected new housing supply, indicating a balanced but tight market with limited excess inventory.

The demographic trend also drives demand for community infrastructure, retail spaces, and services, creating investment opportunities beyond residential property. Areas experiencing the fastest population growth often see corresponding appreciation in commercial real estate values.

This sustained demographic pressure provides fundamental support for property values and rental rates across all market segments, making Dar es Salaam's real estate market less vulnerable to speculative downturns compared to slower-growing cities.

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 percentage of foreign investment is flowing into the real estate sector, and from which countries are the main investors coming?

Foreign investment in Dar es Salaam's real estate sector is increasing, particularly in luxury and commercial segments.

The primary source countries for foreign real estate investment include China, India, UAE, South Africa, and various European nations. Chinese investors focus heavily on large-scale infrastructure-related projects and commercial developments, while Indian investors often target mid-market residential and retail properties.

UAE and South African investors typically concentrate on luxury residential developments and high-end commercial projects in prime districts like Masaki and Oyster Bay. European investors, particularly from the UK and Germany, show interest in both residential and hospitality-related real estate.

These foreign investment flows concentrate heavily in premium districts and large-scale developments rather than affordable housing segments. The investment pattern reflects foreign investors' preference for assets in established, well-serviced areas with clear legal frameworks and strong potential for capital appreciation.

Government policies generally encourage foreign investment while maintaining certain restrictions on direct land ownership, leading many foreign investors to use long-term lease arrangements or partnership structures with local entities.

How have infrastructure projects like the Bus Rapid Transit system and port expansion impacted property values within a 5 km radius?

Major infrastructure projects have driven property values up by 8% to 12% annually within 5 kilometers of key developments.

The Bus Rapid Transit (BRT) system has particularly benefited districts like Mikocheni and Msasani, where improved connectivity to central business areas has increased residential and commercial property attractiveness. Properties near BRT stations command premium pricing due to reduced commute times and transportation costs.

Port expansion projects have elevated values in nearby neighborhoods as economic activity and employment opportunities increase. The improved logistics infrastructure attracts businesses and workers to surrounding areas, driving both residential and commercial real estate demand.

Road improvements, utility upgrades, and new bridge construction have similar positive impacts on property values. Areas that previously suffered from poor infrastructure often experience dramatic value appreciation once connectivity and services improve.

These infrastructure-driven value increases tend to be sustainable rather than speculative, as they reflect genuine improvements in location utility and quality of life. Properties benefiting from infrastructure improvements typically maintain their value premiums over time.

What are the government's urban development and housing policies, including tax incentives or restrictions, that could influence future market trends?

Government urban development policies focus on expanding affordable housing supply and streamlining planning permit processes.

1. **Tax incentives for priority infrastructure zones** - Reduced property taxes and development fees in designated growth areas2. **Streamlined planning permits** - Faster approval processes for residential developments meeting affordable housing criteria 3. **Mixed-use development promotion** - Zoning changes encouraging combined residential and commercial projects4. **High-density residential incentives** - Bonus floor area ratios for developers building affordable housing units5. **Foreign investment facilitation** - Clear guidelines for foreign participation in real estate development while maintaining land ownership restrictions

Property gains tax rates and transaction taxes remain moderate for new builds and developments in key growth corridors. The government actively promotes mixed-use and high-density residential developments to address supply pressure from rapid urbanization.

Restrictions on certain forms of foreign land ownership continue, but the government increasingly facilitates foreign investment through long-term lease arrangements and joint venture structures. These policies balance the need for foreign capital with domestic land ownership objectives.

It's something we develop in our Tanzania property pack.

What are the risks of oversupply or market slowdown, and which indicators should investors watch closely?

Key risks include potential oversupply in mid-market and peripheral areas, particularly if vacancy rates rise above 20%.

Investors should monitor several critical indicators for early warning signs of market slowdown. Vacancy rates climbing toward or above 20% in any market segment indicate oversupply conditions that could pressure both rents and property values.

Rental yields dropping toward 4-5% suggest either excessive property price appreciation relative to rental income or weakening rental demand. This yield compression can signal market imbalance requiring correction through price adjustments or improved rental rates.

Rising unsold inventory levels, particularly developments sitting unsold for more than 6 months, indicate demand weakness that could spread to other market segments. Similarly, increasing median listing times beyond historical norms suggest buyer hesitation or affordability constraints.

Declining rent levels in established neighborhoods would represent a significant warning sign, as rental income typically provides more immediate market feedback than sales prices. Any sustained rent decreases could precede broader market corrections.

Monitoring these indicators helps investors identify potential market turning points and adjust investment strategies accordingly, whether through market segment shifts, geographical diversification, or timing adjustments.

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.

Sources

1. The African Investor - Dar es Salaam Price Forecasts
2. The African Investor - Tanzania Price Forecasts
3. IPP Media - Tanzania's Real Estate Sector Growth
4. Zoom Tanzania Marketplace
5. The African Investor - Dar es Salaam Property
6. Makazimapya Property Listings
7. African Union for Housing Finance - Tanzania Fact Sheet
8. Reall - Tanzania Market Systems Profile