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Zanzibar's property market is experiencing significant growth driven by tourism demand and coastal development expansion.
Current property prices range from $80,000 for suburban apartments to over $2 million for premium beachfront villas, with coastal areas showing 8-15% annual price increases. Rental yields vary from 5-8% for long-term rentals to 10-15% for beachfront short-term rentals, making it attractive for both cash flow and capital appreciation investors.
If you want to go deeper, you can check our pack of documents related to the real estate market in Tanzania, based on reliable facts and data, not opinions or rumors.
Zanzibar offers strong property investment potential with 8-15% annual price growth in prime coastal areas and rental yields of 10-15% for beachfront properties.
Foreign buyers can purchase leasehold properties with 99-year terms, focusing on areas like Nungwi, Michamvi, and Matemwe for optimal returns.
| Investment Factor | Current Status | Recommendation |
|---|---|---|
| Best Areas | Nungwi, Michamvi, Matemwe showing 10-15% growth | Focus on coastal prime locations |
| Property Types | Beachfront villas: 10-15% yields, Apartments: 5-8% | Villas for highest returns |
| Price Range | $80K-$2M+ depending on location and type | $150K-$325K sweet spot |
| Rental Strategy | Short-term: 8-12%, Long-term: 5-7% | Short-term in tourist areas |
| Foreign Ownership | Leasehold only, 99-year terms | Ensure proper legal structure |
| Transaction Costs | 8-15% total including all fees | Budget accordingly |
| Market Timing | Strong growth phase with infrastructure development | Favorable for entry now |
Fact-checked and reviewed by our local expert
Grace Makoye 🇹🇿
Manager of Operations, Zinza Real Estate
What are current property prices in Zanzibar, broken down by area and property type?
As of September 2025, Zanzibar property prices vary significantly based on location and property type.
Beachfront villas in prime coastal areas like Nungwi, Matemwe, Michamvi, and Paje start at $325,000, with premium estates exceeding $2 million. Coastal plots range from $23-35 per square meter in established areas, reaching up to $450 per square meter for premium beachfront locations in Michamvi.
City center apartments cost approximately $3,700 per square meter, typically priced between $200,000-$600,000. Suburban apartments are more affordable at $1,100 per square meter, ranging from $80,000-$300,000. Three-bedroom houses average $150,000 in established areas, while two-bedroom properties in developing areas start from $80,000.
Commercial and resort buildings command higher prices, ranging from $265,000 to $1.1 million depending on size and location.
It's something we develop in our Tanzania property pack.
How have prices changed in the short term, medium term, and long term?
Zanzibar's property market has shown consistent upward momentum across all timeframes.
In the short term (last 12-18 months), coastal regions, especially Nungwi, Michamvi, and Matemwe, have experienced 8-15% annual price increases. This growth is driven by new resort openings and improved infrastructure development in these prime tourism areas.
Over the medium term (3-5 years), property values in hotspot locations have doubled for new projects. Land prices in key areas have risen from $18-24 per square meter in 2019 to $23-35 per square meter in 2025, representing a steady appreciation trajectory.
Long-term trends (10+ years) show that beachfront properties and city apartments have compounded steadily, reflecting sustained tourism growth and consistent investor demand. The strongest growth has occurred in resort zones and well-connected districts with reliable infrastructure.
What are rental yields right now for different property types and neighborhoods?
| Property Type/Location | Rental Yield (%) | Key Factors |
|---|---|---|
| Beachfront Villas/Resorts | 10-15% | High tourist demand, premium rates |
| City Apartments | 5-8% | Steady expat and local demand |
| Short-Term Rentals (Airbnb) | 8-12% | Peak season premiums, active management required |
| Long-Term Rentals (Expats) | 5-7% | Stable income, lower management costs |
| Suburban Properties | 4-6% | Local market, lower tourist appeal |
| Commercial/Resort Properties | 8-14% | Turnkey operations, established income streams |
How do short-term rental returns compare with long-term rental returns in Zanzibar?
Short-term rentals significantly outperform long-term rentals in terms of yield potential but require more active management.
Short-term rentals (Airbnb and similar platforms) generate 8-12% yields, with higher premiums during peak season and in beachfront locations. The average annual income for a standard property is approximately $7,000, with occupancy rates around 40%. These properties benefit from tourism influx and can command premium daily rates during high season.
Long-term rentals targeting expatriates and long-term residents yield 5-7% gross returns in prime locations like Nungwi, Paje, and Fumba Town. While offering lower gross yields, they provide steadier income with less management intensity and lower operational costs.
Short-term rentals require more active management, higher marketing expenses, and frequent property maintenance but offer superior cash flow potential during peak tourist months. Long-term rentals are lower-maintenance with predictable income but less overall profitability.
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Which areas are most attractive for capital appreciation in the next 3-5 years?
Several key areas in Zanzibar are positioned for strong capital appreciation based on current development trends and infrastructure improvements.
Nungwi leads the market with 10-15% annual price growth, driven by luxury resort development and rapid tourism infrastructure expansion. The area benefits from excellent beaches and established tourist facilities, making it highly attractive to both developers and investors.
Michamvi is experiencing rapid value increases due to new luxury developments and its proximity to some of Zanzibar's most pristine beaches. This area is becoming increasingly popular among high-end tourists and investors seeking premium beachfront properties.
Matemwe, Jambiani, and Paje are showing 8-12% annual increases, supported by boutique resort development and strong European tourist demand. These areas offer a balance between development potential and authentic local character that appeals to discerning travelers.
Stone Town maintains steady 6-8% annual price increases, supported by its UNESCO World Heritage status and cultural significance. The area benefits from heritage tourism and restoration projects that add value to historic properties.
What infrastructure projects or government policies could impact property values?
Major infrastructure improvements and supportive government policies are significantly boosting Zanzibar's property market attractiveness.
Current infrastructure upgrades include airport expansion, new highway construction, and improved utilities (water, electricity, and fiber internet) across the east coast and beach districts. These improvements create accessibility advantages and premium valuations, sometimes creating a 15-20% value differential for properties in upgraded areas.
The government has introduced a golden visa program and real estate residency options for investments of $100,000 or more, supporting foreign demand. The Zanzibar Investment Promotion Authority (ZIPA) actively encourages foreign participation in the real estate sector through streamlined processes and investment incentives.
Ongoing projects include large-scale resort launches, luxury development approvals, and upgraded commercial infrastructure that enhance the overall investment environment. These developments create positive spillover effects for surrounding properties and establish Zanzibar as a premium destination.
It's something we develop in our Tanzania property pack.
What are the risks and restrictions for foreigners buying property in Zanzibar?
Foreign property ownership in Zanzibar operates under specific legal frameworks that investors must understand before purchasing.
Foreigners can only acquire leasehold properties, not freehold ownership. Lease terms typically extend up to 99 years with renewal possibilities, but foreigners cannot directly purchase agricultural or village land. Only condominiums and government-approved development projects are accessible to foreign buyers.
Leasehold properties are transferable and inheritable, but transactions may require government approval and additional fees. Some restrictions apply to specific property types and locations, particularly in culturally sensitive or agricultural areas.
The Zanzibar real estate market shows relatively good liquidity in prime coastal and tourist zones, but resale can be slower for non-premium apartments or undeveloped land. Properties in established tourist areas tend to have better resale potential due to consistent demand from both investors and end-users.
Legal due diligence is crucial, as property disputes can arise from unclear land titles or competing claims. Working with experienced local legal counsel and ensuring proper documentation is essential for protecting investment interests.
What are the transaction costs, taxes, and ongoing expenses you should budget for?
| Cost Component | Typical Rate | Paid By |
|---|---|---|
| Stamp Duty | 1% | Buyer |
| Registration Fee | 0.25% | Buyer |
| Notary Fee | 1-3% | Buyer |
| Legal Fees | 1-2% | Buyer |
| Agent Commission | 5-10% | Buyer |
| Valuation Fee | 0.1% | Seller |
| Foreign Facilitation | 1-2% | Buyer |
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.
Which property types are best positioned for growth or cash flow?
Different property types in Zanzibar offer distinct advantages depending on your investment strategy and risk tolerance.
Beachfront villas provide the highest appreciation potential and rental premiums, making them ideal for short-term rental strategies. These properties benefit from premium location advantages and strong tourist demand, but require higher initial investment and active management.
Commercial and resort properties offer strong cash flow potential, often with turnkey operations and established rental income streams. These properties typically come with management contracts and proven revenue histories, making them attractive for passive investors seeking immediate returns.
Apartments serve the mid-market segment effectively, particularly for long-term expatriate tenants. They offer more affordable entry points and steady rental demand from the growing expat community and local professionals.
Land purchases are the most speculative but can offer attractive appreciation potential if located in growth corridors or adjacent to resort developments. However, undeveloped land requires patience and market timing skills to maximize returns.
How liquid is the Zanzibar real estate market if you need to resell?
Market liquidity in Zanzibar varies significantly by property type and location, with prime coastal areas showing better resale potential.
Prime coastal and tourist zones demonstrate high liquidity, especially for branded projects and resort-leased assets. Properties in established areas like Nungwi, Paje, and Michamvi typically attract multiple buyer types, including investors, expatriates, and tourism operators.
Suburban properties and undeveloped land show lower liquidity with slower resale cycles. These properties may require longer marketing periods and potentially lower prices to attract buyers, particularly during off-peak tourism periods.
Properties with established rental income, proper documentation, and prime locations generally achieve faster sales at better prices. The market favors well-maintained properties with clear legal titles and proven income potential.
Seasonal factors affect liquidity, with higher activity during peak tourist seasons when investor interest and viewing activity increase. Properties marketed during high season often achieve better prices and faster sales.
What budget ranges currently offer the best balance between entry price, rental income, and appreciation potential?
Different budget ranges in Zanzibar's market offer distinct risk-return profiles for property investors.
The $80,000-$150,000 range provides entry-level opportunities with suburban apartments that offer reliable long-term rental income with moderate appreciation potential. These properties appeal to local professionals and budget-conscious expatriates, providing steady but modest returns.
The $150,000-$325,000 range represents the market sweet spot, offering three-bedroom houses and smaller villas in popular beach areas. This range provides the best balance of rental yield and growth potential, attracting both long-term tenants and short-term rental demand.
Properties above $325,000 target the premium market with maximum capital appreciation and short-term rental income potential in top growth areas. These beachfront villas and luxury properties command premium rates but require higher initial investment and more sophisticated management.
It's something we develop in our Tanzania property pack.
If you want to buy now, where should you focus?
1. **For Living (Relocation):** Focus on Fumba Town or Stone Town with apartments or houses. These areas offer reliable infrastructure, established expat communities, and good access to amenities and services.2. **For Long-term Rental Income:** Target Nungwi, Paje, or Bwejuu with apartments or villas. These locations have high demand from expatriate tenants and tourism workers seeking longer-term accommodation.3. **For Short-term Rental (Airbnb):** Invest in beachfront villas or resort properties in Nungwi, Michamvi, or Paje. These are the top tourist locations that command premium daily rates and high occupancy during peak seasons.4. **For Resale/Capital Appreciation:** Consider land or luxury villas in Michamvi or Nungwi. These areas are experiencing the fastest price growth and maintain high liquidity for future resale.5. **For Balanced Investment:** Three-bedroom houses or small villas in the $150,000-$325,000 range in coastal areas near Nungwi or Paje offer the optimal balance of rental income potential and capital appreciation.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 property market presents compelling opportunities for investors seeking both income and capital appreciation in a growing tourism destination.
Success requires focusing on prime coastal locations, understanding leasehold restrictions, and budgeting appropriately for transaction costs while leveraging the strong rental demand from tourism growth.
Sources
- Vela Zanzibar Property Investment Statistics
- The African Investor - Zanzibar Price Forecasts
- Sandbank Villas - Owning Property in Zanzibar as a Foreigner
- The African Investor - House Prices Tanzania
- The African Investor - Foreigners Buy Land Zanzibar
- ByShivo - Buying Property in Zanzibar Guide
- The Property Hub TZ - Tanzania Property Market Trends
- Airbtics - Annual Airbnb Revenue in Zanzibar