Is it a good time to buy a property in Tanzania in 2024?

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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 78.2, which is an acceptable number.

Tanzania benefits from strong political leadership and a stable democratic system, which has helped to create a peaceful environment and foster economic growth. Additionally, the country has maintained strong international relations, which has helped to maintain peace and stability both domestically and abroad.

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 2023 with a growth rate of 5.2%, which reflects the country's accelerated progress. As for 2024, the experts say 6.2%.

That's not all - this impressive growth will keep going on since Tanzania's economy is expected to increase by 28.1% during the next 5 years, resulting in an average GDP growth rate of 5.6%.

The expected massive growth in Tanzania is a very good thing for someone who wants to invest in real estate because it indicates a strong economy and increased demand for housing, which can lead to greater returns on investments.

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 (+3% 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 2024.

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, inflation is projected to increase

Positive

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 18.3%, which gives us an average yearly increase of 3.7%.

This data infers that Tanzania is expected to experience inflation. If we look just at this signal, then it may be a good time to consider buying property. This could allow you to sell it later for a higher price and make a profit.

Is it a good time to buy real estate in Tanzania then?

Let's wrap things up!

The year 2024 presents a potentially advantageous window for property investment in Tanzania, driven by several favorable factors. The country's strong growth projections create an environment conducive to property appreciation, offering potential investors the opportunity to benefit from rising property values. With Tanzania's population experiencing growth and an incremental improvement in economic conditions, the demand for housing and real estate may increase, further bolstering the attractiveness of property investment.

Inflation is projected to rise in Tanzania, which can be advantageous for property investors. Real estate often serves as a hedge against inflation, as property values and rental income have the potential to increase alongside inflation rates. This can provide investors with a measure of protection against the eroding effects of inflation on the value of money.

Although Tanzania is relatively stable today, it's essential to consider neutral factors such as rental yields. While rental yields may be lower in Tanzania compared to other markets, the broader growth prospects and positive indicators suggest that the potential for property value appreciation could offset the relatively lower rental income. Investors need to weigh this trade-off when making their decisions.

It's worth noting that while Tanzania's stability, population growth, and economic conditions are favorable, rental yields are on the lower side. This might impact the immediate income potential from property investment. However, the overall growth potential and the possibility of long-term value appreciation in the Tanzanian property market could make 2024 an opportune time to enter the market.

In summary, the combination of Tanzania's projected economic growth, population dynamics, inflation trends, and stability makes 2024 a year that holds promise for property investment. Investors should carefully consider the interplay between these factors and their individual investment goals to determine if the Tanzanian property market aligns with their strategies.

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.

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.