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Everything you need to know is included in our Tanzania Property Pack
Are you considering buying real estate in the land of Serengeti? Are you pondering if it's the right time to buy or if you should consider waiting until next year?
People have differing viewpoints when it comes to market timing. The Tanzanian real estate agent you consulted might advise you that now is the opportune time to buy property, while your childhood friend from Dar es Salaam may suggest exercising more patience before making a decision.
At TheAfricanvestor, when we create articles or update our pack of documents related to the real estate market in Tanzania, we base our work on facts and data we can trust, not opinions or rumors.
After thoroughly analyzing official reports and statistics available on government websites, we have gathered solid information in a database. Here are our findings that can assist you in determining whether it's the right time to invest in real estate in Tanzania.
Happy reading time!
How is the property market in Tanzania currently?
Tanzania is, today, a relatively stable country
Neutral
If you want to invest in properties, prioritize stability as it safeguards against economic downturns and minimizes volatility. It is an information you need as a foreigner looking to buy a property in Tanzania.
These days, Tanzania is experiencing a notable degree of stability. The last Fragile State Index reported for this country is 75.7, which is an acceptable number.
Tanzania's relative stability today can be attributed to its historical emphasis on national unity and social cohesion, largely fostered by the policies of its first president, Julius Nyerere, who promoted Swahili as a unifying national language and implemented the Ujamaa policy to reduce ethnic divisions. Additionally, Tanzania has maintained a consistent record of peaceful transitions of power through democratic elections, which has helped to sustain political stability in the region.
Let's examine other data now to see if it's the right moment to purchase property in this country.
Tanzania is projected to grow (a lot!)
Positive
Evaluate the country's economic condition before deciding to invest in property.
According to the IMF's estimations, Tanzania will end 2024 with a growth rate of 5.5%, which reflects the country's accelerated progress. As for 2025, the experts say 6%.
That's not all - this impressive growth will keep going on since Tanzania's economy is expected to increase by 27.7% during the next 5 years, resulting in an average GDP growth rate of 5.5%.
Tanzania's expected massive growth means more people will need places to live and work, driving up demand for real estate. This increased demand can lead to higher property values and rental income, making it a promising opportunity for real estate investors.
In addition, there are other metrics to consider.
Tanzania's population is growing and getting (a bit) richer
Positive
Before you purchase real estate, take a moment to consider population growth and GDP per capita, because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Tanzania, the average GDP per capita has changed by 4.5% over the last 5 years. Despite being minimal, there is still some observable growth. Furthermore, the Tanzanian population is growing (+18% in 5 years).
This means that, if you purchase a safari lodge in Serengeti and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is likely to go up in Tanzanian cities, such as DDar es Salaam, Arusha, or Zanzibar City in 2025.
Rental yields are quite low in Tanzania
Neutral
Now, let's shift our focus to the rental yield.
It's the annual rental income of a property divided by its price. For example, if a property in Tanzania is purchased for 100,000,000 TZS and generates 5,000,000 TZS in annual rental income, the rental yield would be 5%.
According to Numbeo, rental properties in Tanzania offer gross rental yields ranging from 0.0% and 2.7%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Tanzania.
It suggests that your real estate investment won't generate much returns or income.
Everything you need to know is included in our Tanzania Property Pack
In Tanzania, expect minimal inflationary effect
Neutral
Simply put, inflation is when prices keep going up.
It's when your regular safari tour in Serengeti National Park costs 300,000 Tanzanian shillings instead of 250,000 Tanzanian shillings a couple of years ago.
If you're considering investing in a property, high inflation can bring you several advantages:
- Property values tend to increase over time, potentially leading to capital appreciation.
- Inflation can result in higher rental rates, increasing the property's cash flow.
- Inflation decreases the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, helping preserve the investment's value.
- Diversifying into real estate provides stability during periods of inflation.
As per the IMF's forecasts, over the next 5 years, Tanzania will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data infers that Tanzania is anticipated to experience negligible inflation. Unfortunately, in the absence of inflation, purchasing a property now may not result in substantial price increases or substantial profits in the future.
Is it a good time to buy real estate in Tanzania then?
Let's wrap things up!
Considering buying property in Tanzania in 2025 could be a smart move, especially given the country's current stability. Tanzania has been relatively stable politically and economically, which is a crucial factor for any real estate investment. Stability often translates to a safer investment environment, reducing the risks associated with property ownership. This foundation of stability can provide peace of mind for investors looking to enter the Tanzanian real estate market.
Moreover, Tanzania's economy is on an impressive growth trajectory. With an expected increase of 27.7% over the next five years, the country's GDP is projected to grow at an average rate of 5.5% annually. This economic expansion is likely to spur development across various sectors, including real estate. As the economy grows, so does the demand for housing and commercial spaces, which can drive up property values and rental income, making it an attractive prospect for investors.
Another factor to consider is Tanzania's growing population and increasing wealth. As more people move to urban areas and the middle class expands, the demand for quality housing and office spaces will rise. This demographic shift can lead to a surge in real estate demand, providing opportunities for investors to capitalize on the growing need for residential and commercial properties. The potential for higher returns on investment is significant as the population continues to grow and gain purchasing power.
While rental yields in Tanzania currently range from 0.0% to 2.7%, according to Numbeo, the minimal inflationary effect expected in the country could help maintain the value of real estate investments. With inflation kept in check, the purchasing power of rental income is less likely to erode, ensuring that investors can enjoy stable returns. This combination of economic growth, population expansion, and controlled inflation makes 2025 a potentially opportune time to invest in Tanzanian property.
We genuinely hope this article has provided you with helpful information.. If you need to know more, you can check our our pack of documents related to the real estate market in Tanzania.
-Will real estate prices go up in Tanzania?
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.