Authored by the expert who managed and guided the team behind the Tanzania Property Pack
Everything you need to know before buying real estate is included in our Republic of the Congo Property Pack
Stone Town Zanzibar's property market is experiencing significant growth driven by tourism expansion and heritage restoration projects.
Property prices range from $1,000-$1,800 per square meter for residential units, while commercial properties command $2,500-$3,700 per square meter, with annual appreciation rates of 5-7% over the past five years.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.
Stone Town Zanzibar shows strong investment potential with high rental yields of 10-15% for short-term rentals and steady 5-12% for long-term properties.
Limited supply, UNESCO heritage status, and government incentives for foreign investors are driving sustained price growth in this historic market.
| Property Type | Price per sqm (USD) | Annual Rental Yield |
|---|---|---|
| Residential Standard | $1,000 - $1,800 | 5-12% (long-term) |
| Residential Premium | $2,400 - $3,700 | 10-15% (short-term) |
| Commercial Central | $2,500 - $3,700 | 8-14% |
| Commercial High-end | $3,700+ | 12-18% |
| Heritage Properties | $2,000 - $4,000 | 8-16% |
| Oceanfront | $3,000 - $5,000 | 12-20% |
| Average Growth Rate | 5-7% annually | Peak: 10-15% |
Fact-checked and reviewed by our local expert
Grace Makoye 🇹🇿
Manager of Operations, Zinza Real Estate
What are the current property prices per square meter in Stone Town Zanzibar?
As of September 2025, residential properties in Stone Town Zanzibar average between $1,000 and $1,800 per square meter for standard apartments and historic homes.
Premium residential listings in prime locations reach $2,400 to $3,700 per square meter, particularly for oceanfront properties and fully restored heritage buildings.
Commercial properties command higher prices, typically ranging from $2,500 to $3,700 per square meter in the city center. High-end commercial buildings and prime retail spaces can exceed $3,700 per square meter significantly.
The pricing reflects Stone Town's UNESCO World Heritage status and limited supply of properties available for sale due to strict conservation regulations.
These prices represent a premium compared to other Zanzibar areas, justified by the historic significance, central location, and strong tourism infrastructure in Stone Town.
How have property values changed in Stone Town over the past five years?
Stone Town property values have experienced steady annual growth of 5-7% over the last five years, outpacing many other Tanzanian real estate markets.
High-end oceanfront and heritage properties have seen even stronger appreciation, with some segments recording 10-15% annual increases driven by international buyer interest.
The growth has been particularly pronounced since 2022, when major UNESCO-backed restoration projects began attracting more foreign investment and tourism revenue.
Government incentives for foreign property buyers and the expanding tourism sector have created sustained upward pressure on property values throughout this period.
This consistent appreciation trend positions Stone Town among Tanzania's strongest performing real estate markets, with values more than doubling in some premium segments since 2020.
What rental yields can investors expect in Stone Town Zanzibar?
Long-term rental properties in Stone Town generate annual yields of 5-12%, with steady demand from expatriates, retirees, and working professionals.
Short-term vacation rentals through platforms like Airbnb and Booking.com deliver higher returns, typically yielding 10-15% annually for well-located and properly managed properties.
Premium properties in prime Stone Town locations can achieve yields up to 15-20% during peak tourist seasons, though performance varies based on property quality and management efficiency.
The rental market benefits from Stone Town's status as Zanzibar's primary tourist destination, with over 1.5 million annual visitors creating consistent demand.
These yields are significantly higher than most developed markets, reflecting both the growing tourism sector and limited quality rental inventory in the historic center.
What factors are driving property price increases in Stone Town?
Tourism growth is the primary driver, with Stone Town receiving over 1.5 million visitors annually and benefiting from increasing international visitor spending.
Heritage restoration projects funded by UNESCO and the Tanzanian government are enhancing property values through infrastructure improvements and building renovations.
Limited property supply due to strict heritage conservation controls and government approval requirements for new construction creates ongoing scarcity.
Foreign investment incentives through ZIPA (Zanzibar Investment Promotion Authority) are expanding the buyer pool with attractive leasehold terms and residency benefits.
Infrastructure development including utility upgrades, road improvements, and new hospital facilities is improving the overall investment attractiveness of Stone Town properties.
Don't lose money on your property in Tanzania
100% of people who have lost money there have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.
What is the supply and demand situation for Stone Town real estate?
Demand significantly outpaces supply in Stone Town, especially for properties in the historic center and waterfront areas, creating a strong seller's market.
New construction is strictly regulated by the Stone Town Conservation Authority to preserve UNESCO heritage status, limiting the addition of new inventory.
International buyers, particularly from Europe and North America, are competing with local investors and tourism businesses for limited quality properties.
The Zanzibar Housing Corporation is developing new affordable housing projects, but these primarily serve local residents rather than investment buyers.
Supply constraints are expected to persist due to conservation regulations, while demand continues growing with expanding tourism and foreign investment interest.
What government policies affect property ownership in Stone Town?
Foreign buyers can purchase property through 33-99 year leaseholds with government approval through ZIPA, but cannot own freehold land directly.
The Stone Town Conservation Authority requires heritage zone permits for any building modifications or renovations to maintain UNESCO compliance.
Foreign property buyers receive residency permit eligibility, 100% ownership rights on property improvements, and certain income tax exemptions as investment incentives.
All property transactions must be reviewed for compliance with UNESCO conservation rules and traditional Zanzibari land rights.
Recent policy changes have streamlined the foreign investment approval process while maintaining strict controls on development within the historic center.
Are there major development projects planned for Stone Town?
A comprehensive three-year building restoration program is underway to repaint and renovate all Stone Town buildings, scheduled for completion between 2025-2028.
Underground utility upgrades, improved drainage systems, and road improvements are being implemented with World Bank funding to modernize infrastructure.
The Old Fort restoration project and new hospital facilities are enhancing Stone Town's appeal to residents and tourists alike.
Luxury hotel projects by international brands like Anantara are bringing additional tourism infrastructure and employment opportunities.
It's something we develop in our Tanzania property pack.
What are the occupancy rates for short-term rentals in Stone Town?
| Property Category | Average Occupancy Rate | Peak Season Rate |
|---|---|---|
| Standard Airbnb Listings | 40-50% | 60-70% |
| Premium Heritage Properties | 55-75% | 75-90% |
| Oceanfront Rentals | 60-80% | 80-95% |
| Budget Accommodations | 35-45% | 50-65% |
| Luxury Suites | 50-70% | 70-85% |
| Historic Center Average | 45-65% | 65-80% |
| 1-Bedroom Units (93.8% of market) | 40-60% | 60-75% |
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.
How does Stone Town's cost of living compare to other Zanzibar areas?
Stone Town has the highest cost of living in Zanzibar, reflecting its central location, heritage properties, and concentration of tourist amenities.
Housing costs are 30-50% higher than suburban Zanzibar areas, but property values and rental income potential are proportionally greater.
Daily expenses including dining, shopping, and services command premium prices due to the tourist-focused economy and limited commercial space.
Despite higher costs, Stone Town remains significantly more affordable than major East African cities like Nairobi or Dar es Salaam.
The cost premium is offset by superior infrastructure, cultural amenities, and proximity to beaches and historical attractions that enhance quality of life.
What financing options are available for Stone Town property buyers?
Local buyers can access mortgage financing with interest rates ranging from 15-19%, which is lower than historical peaks but still high by international standards.
Foreign buyers typically face limited bank financing options and challenging approval processes, making cash purchases the preferred method.
Some international banks operating in Tanzania offer limited mortgage products for foreign residents with substantial local income or collateral.
Developer financing is occasionally available for new construction projects, typically requiring significant down payments of 30-50%.
It's something we develop in our Tanzania property pack.
What is Stone Town's infrastructure like and how will it improve?
Stone Town's infrastructure is solid and improving rapidly through government-funded modernization projects including repaving, underground utilities, and drainage upgrades.
The power grid and water systems are being upgraded to support growing tourism and residential demand, with completion expected by 2026.
Internet connectivity is excellent with fiber optic coverage throughout the historic center, supporting remote work and digital nomad residents.
Transportation links to Zanzibar Airport and ferry services to mainland Tanzania are well-maintained and regularly improved.
Ongoing World Bank-funded infrastructure projects are expected to further enhance property values over the next 2-5 years through improved utilities and public facilities.
How do tourism trends affect Stone Town real estate values?
The expanding tourism sector directly drives property values higher through increased demand for short-term rental properties and tourism-related businesses.
International hotel chains establishing operations in Stone Town create employment opportunities and increase local income levels, supporting residential demand.
Tourism growth provides stable rental income streams for property investors, with visitor numbers consistently exceeding 1.5 million annually.
New tourist attractions and cultural events enhance Stone Town's appeal, creating additional revenue opportunities for property owners in hospitality.
Economic stability supported by tourism revenue and favorable investment climate maintains strong investor confidence in the Stone Town property market.
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.
Stone Town Zanzibar presents a compelling investment opportunity with strong fundamentals driving sustained growth in property values.
While prices may appear high compared to other Tanzanian markets, the combination of limited supply, tourism growth, and heritage restoration projects supports continued appreciation potential for investors.
It's something we develop in our Tanzania property pack.
Sources
- BambooRoutes - Average Property Price Zanzibar
- TheAfricanVestor - House Price Tanzania
- World Estate - Pros and Cons of Buying Property in Zanzibar
- TheAfricanVestor - Zanzibar Real Estate Trends
- TheAfricanVestor - Average Rental Yield Zanzibar
- Vela Zanzibar - Property Investment Statistics
- The Citizen - Zanzibar Renovation Project
- Airbtics - Annual Airbnb Revenue Zanzibar
- Johnny Africa - Cost of Living Zanzibar
- UNDP - Zanzibar Investment Guide 2023