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
Tanzania's property market is experiencing significant growth with residential prices rising 86% over the past five years.
The market shows strong fundamentals with 6-9% rental yields in prime areas, declining mortgage rates from 22% to 15%, and substantial government infrastructure spending of $13.5 billion planned through 2030. Foreign investment has surged 63% in recent projects, while urbanization is accelerating with 500,000-900,000 people moving to cities annually.
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.
Tanzania's property market is forecast to grow 5-8% annually over the next five years, driven by rapid urbanization, infrastructure investment, and increasing foreign direct investment.
While supply struggles to meet demand with 200,000 new units annually against household formation needs, prime areas in Dar es Salaam command $3,820 per square meter with strong rental yields of 6-9%.
| Market Indicator | Current Value (2025) | 5-Year Trend/Forecast |
|---|---|---|
| Average Price/sqm (Residential National) | $1,200 | +86% since 2020, 5-8% annual growth |
| Dar es Salaam Prime Areas | $3,820/sqm | 5-7% annual appreciation |
| Rental Yields (Major Cities) | 6-9% Dar, 6-8% Arusha/Dodoma | Stable, prime areas highest |
| Mortgage Interest Rates | 15% (down from 22%) | Declining, improved accessibility |
| Annual Housing Supply | 200,000 units | Insufficient for demand |
| Urbanization Rate | 34.9% (2022), 59% by 2050 | 500,000-900,000 city movers annually |
| FDI in Real Estate | +63% project increase | Strong growth, China/UAE leading |
| GDP Share (Construction + Real Estate) | 8-10% | Up from 5-6% decade ago |
Fact-checked and reviewed by our local expert
Grace Makoye 🇹🇿
Manager of Operations, Zinza Real Estate
What are the current average prices per square meter for residential and commercial properties in Tanzania?
Residential property prices in Tanzania show significant variation between regions and property types as of September 2025.
The national average for residential properties stands at approximately $1,200 per square meter. However, prime areas in Dar es Salaam command much higher prices, with locations like Masaki and Oyster Bay reaching up to $3,820 per square meter. Suburban apartments in Dar es Salaam typically range from $625 to $1,200 per square meter.
Zanzibar City represents another premium market, averaging $3,700 per square meter for residential properties. Meanwhile, other major cities like Arusha and Dodoma offer more affordable options, with residential prices ranging from $700 to $1,200 per square meter.
Commercial properties in Dar es Salaam city center command rental rates of $15 to $25 per square meter per month. Purchase prices for prime commercial office space align with residential rates in the city center, typically ranging from $1,200 to $1,800 per square meter.
Over the past five years, residential property values have increased by 86.65% in real terms since 2020, with Dar es Salaam experiencing consistent annual growth of 5-7%.
How does annual housing construction compare to household formation in Tanzania?
Tanzania faces a significant housing supply shortage with construction lagging behind household formation rates.
Approximately 200,000 new residential units are completed annually across the country. These units primarily target civil servants and the growing middle class population. The construction sector focuses heavily on affordable housing initiatives to address the growing demand.
Household formation in Tanzania has grown by 2.69% annually, reaching 14.1 million households in 2025. This translates to roughly 350,000 new households formed each year. The rapid population growth and urbanization trends continue to drive household formation at rates that exceed new housing supply.
The gap between supply and demand creates ongoing housing shortages, particularly in urban areas where rapid migration intensifies the problem. Despite government efforts to boost construction, the annual deficit of approximately 150,000 housing units continues to put upward pressure on property prices and rental rates.
It's something we develop in our Tanzania property pack.
What are the current rental yields in Tanzania's major cities?
Rental yields across Tanzania's major cities remain attractive for property investors as of September 2025.
Dar es Salaam offers the strongest rental returns, with prime areas like Masaki, Oyster Bay, and Msasani delivering 6-9% annual yields. The overall city average sits at 5-7%, reflecting the mix of premium and standard residential properties. High-end properties in waterfront locations and expatriate-preferred neighborhoods command the highest yields.
Arusha delivers rental yields of 6-8%, driven by consistent tourism demand and a growing expatriate community. The city's status as a gateway to safari destinations and Mount Kilimanjaro creates year-round rental demand for both short-term and long-term properties.
Dodoma, Tanzania's capital city, also achieves yields of 6-8%. The government's administrative functions and ongoing infrastructure investments support steady rental demand. The city's growing importance as the political center continues to attract civil servants and government contractors.
These yield levels reflect strong fundamentals including urbanization trends, limited supply, and growing demand from both local and international tenants.
How have mortgage rates and loan conditions evolved in Tanzania?
Tanzania's mortgage market has undergone significant improvements over the past decade, making property financing more accessible.
Mortgage interest rates have declined substantially from 22% to 15% over the last ten years. This reduction followed financial sector reforms implemented in 2023, which enhanced competition among lenders and improved monetary policy effectiveness. The downward trend in rates has made property purchases more affordable for middle-class buyers.
Tanzanian banks currently offer loan-to-value (LTV) ratios ranging from 70-80% for residential mortgages. Local buyers typically qualify for higher LTV ratios, while foreign buyers face stricter requirements and must provide larger down payments. The improved banking regulations have standardized lending practices across major financial institutions.
Banks have also expanded their mortgage product offerings, introducing longer repayment terms and more flexible income verification processes. However, foreign buyers still encounter additional documentation requirements and higher interest rate premiums compared to local borrowers.
The mortgage market continues to evolve with government initiatives aimed at increasing homeownership rates and supporting the growing middle class.
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 scale of foreign investment in Tanzania's real estate sector?
Foreign direct investment in Tanzania's real estate sector has experienced remarkable growth in recent years.
FDI in real estate projects has increased by 63% over the past five years, with particularly strong performance in 2024-2025. This surge reflects growing international confidence in Tanzania's property market and economic stability. The investment flows target large-scale residential developments, commercial properties, and infrastructure-linked real estate projects.
China leads foreign investment contributions, followed by Japan, the United Arab Emirates, and South Africa. Chinese investors focus primarily on large residential complexes and commercial developments, while UAE investors target high-end residential and hospitality projects. Japanese investment concentrates on infrastructure-related real estate and industrial properties.
South African investors bring expertise in retail and mixed-use developments, contributing to shopping centers and integrated residential communities. The diversified investor base provides stability and reduces dependence on any single foreign market.
Foreign investors are particularly attracted to Tanzania's strategic location, growing population, and government commitments to infrastructure development and economic reforms.
How will infrastructure spending impact property values in Tanzania?
Tanzania's ambitious infrastructure program is set to significantly boost property values across the country through 2030.
| Infrastructure Category | Investment Amount | Expected Property Impact |
|---|---|---|
| Road Networks | $4.5 billion | 5-8% annual value increase in connected areas |
| Port Expansion (Dar es Salaam) | $3.2 billion | 10-15% premium for coastal properties |
| Standard Gauge Railway (SGR) | $2.8 billion | 8-12% boost along railway corridors |
| Energy Projects | $2.1 billion | 5-7% increase in electrified areas |
| Water Infrastructure | $900 million | 3-5% premium in serviced areas |
The government has allocated over $13.5 billion in infrastructure spending through 2030, targeting roads, ports, railways, and energy systems. This massive investment program aims to transform Tanzania's connectivity and economic competitiveness.
Property values are expected to increase by 5-10% annually in well-connected urban and peri-urban areas. Areas around new transport links will see the strongest appreciation, particularly locations near SGR stations and improved highway networks. The port expansion in Dar es Salaam will create significant value for commercial and residential properties in the coastal corridor.
Infrastructure improvements reduce transaction costs, improve accessibility, and attract both domestic and foreign investment, creating lasting positive effects on property values.
What are Tanzania's urbanization trends and their impact on housing demand?
Tanzania is experiencing rapid urbanization that will fundamentally reshape housing demand over the next decade.
Urbanization reached 34.9% in 2022 and is projected to hit 59% by 2050 according to UN estimates. This acceleration means Tanzania will need 17.7 million housing units by 2030 to accommodate an expected population of 77.7 million people. The urban population growth represents one of Africa's fastest urbanization rates.
Between 500,000 and 900,000 people migrate to urban areas annually, driven by economic opportunities, education access, and rural-urban income disparities. Dar es Salaam remains the primary destination, but secondary cities like Arusha, Mwanza, and Dodoma are also experiencing significant population growth.
This massive urban migration creates intense housing demand that far exceeds current supply capabilities. The housing deficit particularly affects middle and lower-income segments, driving both rental and purchase market growth. Urban housing shortages contribute to informal settlement expansion and put upward pressure on formal housing prices.
Government housing programs and private sector developments struggle to keep pace with the urbanization speed, creating ongoing investment opportunities for developers and property investors.
What is the current state of Tanzania's commercial office market?
Tanzania's commercial office market in Dar es Salaam shows mixed conditions with steady demand but concerning oversupply in premium segments.
Modern office buildings in Dar es Salaam maintain robust demand, with average occupancy rates of 80% in prime Central Business District areas like Masaki and Upanga. However, Grade A office spaces experience oversupply conditions that create competitive pressure on rental rates.
City business districts report vacancy rates around 20%, with smaller office units (10-100 square meters) in highest demand due to SME activity and corporate downsizing trends. Many companies are optimizing space usage and seeking flexible lease terms, favoring smaller, efficient office layouts.
Office rental rates in city-center locations range from $15 to $25 per square meter per month, with premium buildings commanding the higher end of this range. Older buildings and secondary locations offer more competitive rates to attract tenants in the competitive market.
The market outlook remains positive due to continued economic growth and business expansion, but developers must focus on smaller, flexible office formats to meet current tenant preferences.
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 have land prices evolved in peri-urban Dar es Salaam?
Land prices in peri-urban areas around Dar es Salaam have experienced exceptional growth over the past decade.
Peri-urban land prices have grown 8-12% annually over the last ten years, significantly outpacing inflation and urban core price increases. This growth stems from urban expansion, infrastructure development, and speculative investment as the city spreads outward.
Prime peri-urban plots currently sell for $50 to $200 per square meter in 2025, depending on location, infrastructure access, and development potential. Areas with planned or existing infrastructure connections command premium prices within this range.
Infrastructure projects, particularly road improvements and utility extensions, drive the strongest price appreciation. Plots near planned SGR stations or highway interchanges have seen particularly dramatic value increases, sometimes doubling within 2-3 years of infrastructure announcements.
Speculation also contributes to price growth as investors purchase land expecting continued urban expansion and infrastructure development. This creates a cycle where early investors benefit from subsequent infrastructure investments and continued urban growth.
It's something we develop in our Tanzania property pack.
What is the volume and composition of property transactions in Tanzania?
Tanzania's property transaction market shows strong activity with clear patterns between local and foreign buyer participation.
Dar es Salaam processes over 15,000-20,000 residential property transactions annually, representing the bulk of the country's formal property market activity. This volume reflects both the city's size and its role as the commercial capital attracting the majority of property investment and development.
Local buyers form 75-80% of all property purchases, demonstrating the strength of domestic demand and the growing Tanzanian middle class. These buyers typically focus on residential properties for both owner-occupation and rental investment purposes.
Foreign buyers account for 20-25% of transactions, with most purchasing leasehold apartments in prime areas. Foreign buyers concentrate on high-end residential properties in expatriate-preferred locations like Masaki, Oyster Bay, and Msasani Peninsula. They also show interest in commercial properties and mixed-use developments.
The transaction mix reflects Tanzania's dual market structure, with strong domestic demand supporting overall market stability while foreign investment provides premium market liquidity and drives high-end development.
How significant is real estate's contribution to Tanzania's economy?
Real estate and construction have become increasingly important sectors in Tanzania's economy over the past decade.
Construction and real estate combined now represent 8-10% of Tanzania's GDP in 2025, marking a substantial increase from 5-6% a decade ago. This growth reflects the sector's expanding role in economic development and job creation across the country.
The sector is growing at 6-7% annually and is expected to maintain stable growth due to ongoing public and private investment cycles. Government infrastructure spending, private residential development, and commercial property construction all contribute to this sustained growth trajectory.
Real estate's economic importance extends beyond direct GDP contribution through employment creation, financial sector development, and related service industries. The sector supports construction jobs, professional services, property management, and retail activities.
The government recognizes real estate's economic significance and has implemented supportive policies including streamlined approval processes, improved land registration systems, and targeted infrastructure investments to sustain sector growth.
What do major forecasting institutions predict for Tanzania's property market?
International and local financial institutions maintain optimistic forecasts for Tanzania's property sector over the next five years.
The World Bank, IMF, and major local banks forecast annual property sector growth rates of 5-8% for the period 2025-2030. These projections are based on continued infrastructure investment, stable foreign direct investment inflows, and sustained urbanization trends.
1. **World Bank projections** emphasize infrastructure-driven growth, particularly transportation and energy projects that will enhance property accessibility and value2. **IMF forecasts** highlight macroeconomic stability and improved business environment supporting sustained real estate investment3. **Local banking institutions** project continued mortgage market expansion and increased homeownership rates among the middle class4. **Statista market research** indicates commercial real estate will grow alongside residential sectors, driven by business expansion5. **Regional development banks** forecast increased cross-border investment from neighboring East African countriesHowever, forecasting institutions also identify key risk factors that could impact growth trajectories. These include title security issues, slow judicial processes for property disputes, potential infrastructure project delays, and shifts in foreign direct investment policies.
Despite these risks, the consensus view remains positive due to Tanzania's strong demographic trends, government commitment to infrastructure development, and growing integration with regional and global markets.
It's something we develop in our Tanzania property pack.
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.
Tanzania's property market presents compelling investment opportunities with strong fundamentals supporting continued growth through 2030.
The combination of rapid urbanization, infrastructure investment, attractive rental yields, and improving financing conditions creates a favorable environment for both investors and homebuyers seeking long-term value.
Sources
- TheAfricanvestor - Tanzania Price Forecasts
- Property Hub TZ - Understanding Property Prices
- TheAfricanvestor - House Prices Tanzania
- TheAfricanvestor - Dar es Salaam Market Data
- Tanzania Invest - Housing Demand 2050
- TheAfricanvestor - Tanzania Real Estate Market
- Helgi Library - Households Tanzania
- Coldwell Banker - Dar es Salaam Rent Prices