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Tanzania's property market is experiencing significant growth, with residential prices rising 86% over the past 5 years and continued annual growth of 5-10% across major cities.
Property prices in Tanzania are clearly going up, driven by urbanization, foreign investment, infrastructure development, and strong tourism demand, particularly in Dar es Salaam, Zanzibar, and Arusha.
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Tanzania's property market shows strong upward momentum with residential prices rising 86% over five years and annual growth of 5-10% in major cities.
Urban areas like Dar es Salaam and Zanzibar lead price appreciation, supported by foreign investment, infrastructure projects, and tourism demand.
| City | Average Property Price | Annual Growth Rate |
|---|---|---|
| Dar es Salaam | USD 1,200 per sqm | 5-7% |
| Arusha | USD 50,000-70,000 (2-3 bed homes) | 6-8% |
| Zanzibar | USD 50,000+ (basic apartments) | 8-10% |
| Dodoma | Affordable land prices | Rising due to government demand |
| Rental Yields | 5-12% across cities | Strong performance |
| Foreign Investment | USD 617 million proposed (2025) | Increasing trend |
| Mortgage Rates | Reduced to 15% (from 22%) | Improving accessibility |
Fact-checked and reviewed by our local expert
Grace Makoye 🇹🇿
Manager of Operations, Zinza Real Estate
What are the current average property prices in Dar es Salaam, Arusha, Zanzibar, and Dodoma?
As of September 2025, property prices vary significantly across Tanzania's major cities, with Dar es Salaam leading at approximately USD 1,200 per square meter for residential properties.
In Arusha, two- and three-bedroom homes typically cost between USD 50,000 to USD 70,000, making it an attractive option for middle-income buyers and investors. The city's proximity to major tourist attractions and its role as a regional hub contribute to stable demand and pricing.
Zanzibar shows higher price ranges, with basic apartments starting at USD 50,000 and luxury properties reaching several million USD. The island's tourism-driven economy and foreign investment restrictions that create scarcity push prices higher than mainland alternatives.
Dodoma offers the most affordable land prices among major cities, though exact residential figures are less consistently documented. The government's continued investment in the capital city is driving urbanization and increasing demand, particularly for government workers and related services.
How have residential property prices changed over the past 12 months versus the past 5 years?
Tanzania's residential property market has experienced dramatic growth over both timeframes, with the five-year trend showing exceptional gains.
Over the past five years, residential prices in major Tanzanian cities have surged approximately 86% in nominal terms, representing one of the strongest growth periods in the country's real estate history. This growth reflects sustained economic development, urbanization, and increased foreign investment interest.
The past 12 months have shown more moderate but still robust annual growth rates. Dar es Salaam has maintained steady appreciation of 5-7% annually, while Zanzibar has outperformed with 8-10% growth due to its tourism recovery and infrastructure improvements.
Both growth rates significantly outpace Tanzania's inflation rate, indicating real value increases for property owners. This trend suggests the market has maintained momentum despite global economic uncertainties.
Are urban land prices rising faster than rural land prices in Dar es Salaam and Arusha?
Urban land in Dar es Salaam and Arusha is rising significantly faster than rural land prices, driven by concentrated development and investment focus.
Infrastructure development, population growth, and investor concentration in urban areas create much stronger appreciation rates compared to rural regions. Peri-urban corridors near major highways and transit lines show especially rapid appreciation as they benefit from both urban proximity and lower initial costs.
Rural land remains more affordable with slower appreciation rates, as it lacks the development pressures and investment attention that drive urban prices. However, areas with tourism potential or natural resources may experience above-average rural appreciation.
The gap between urban and rural land appreciation is widening, making urban land increasingly expensive but also more liquid for investors seeking capital appreciation.
What is the current rental property demand versus supply in major Tanzanian cities?
Rental demand significantly exceeds supply in Tanzania's major urban centers, creating a landlord-favorable market with strong yield potential.
Dar es Salaam and Zanzibar face particularly tight rental markets, with high demand from urban migration, tourism, and expatriate workers. Affordable housing faces extreme shortages, driving up rents across all price segments and creating opportunities for property investors.
Tourism increases short-term rental activity, especially in Zanzibar, where properties can command premium rates during peak seasons. This dual market of long-term and short-term rentals creates multiple income streams for property owners.
Urban migration accelerates rental demand faster than new supply can be delivered, with current rental yields ranging between 5-12% depending on location and property type. New construction cannot keep pace with population growth and economic development in most cities.
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Are foreign investors still actively buying Tanzanian property, and has this trend increased recently?
Foreign investment in Tanzanian property remains robust and has increased significantly since 2022, demonstrating strong international confidence in the market.
As of early 2025, 143 applications for investment land represent over USD 617 million in proposed capital, showing substantial foreign interest despite regulatory restrictions. This represents a notable increase from previous years and indicates growing market sophistication.
Zanzibar, Dar es Salaam, and Dodoma attract the majority of foreign buyers, with investors adapting to leasehold-only rules for non-citizens. The improved policy environment and sustained market momentum have made these restrictions less of a deterrent.
Foreign investors are particularly attracted to tourism-related properties, commercial real estate, and high-end residential developments. The combination of strong rental yields, capital appreciation, and currency diversification benefits continues to drive international interest.
What government policies introduced in the past two years are affecting property prices?
Recent government reforms have created a more favorable environment for property investment, contributing to rising prices and improved market accessibility.
The most significant change has been the reduction in mortgage rates from 22% to 15% in 2025, dramatically improving affordability and expanding the buyer pool. This policy shift has increased both homeownership rates and property values as more buyers enter the market.
Ongoing work on a national Real Estate Act aims to standardize regulations and improve transaction transparency, increasing investor confidence. The government has also increased the number of approved mortgage lenders, creating more financing competition and options.
Infrastructure regulations have been revised to favor urban development, while expanded affordable housing initiatives target lower-income segments. These combined policies create upward pressure on prices while improving market efficiency and accessibility.
How is the tourism sector impacting property demand and values in Zanzibar and Serengeti regions?
Tourism continues to be a major driver of property demand and values, particularly in Zanzibar where the sector has shown exceptional growth.
Zanzibar experienced 8-10% annual property price growth fueled by record international arrivals and infrastructure improvements. The island's tourism recovery has exceeded pre-pandemic levels, creating strong demand for both short-term rental properties and luxury developments.
Infrastructure improvements including airport upgrades and new resort developments make both short-term and luxury properties more attractive to local and foreign investors. Areas near the Serengeti benefit from safari tourism, though to a lesser extent than coastal Zanzibar.
Tourism-related properties command premium rental rates during peak seasons, with some investors achieving double-digit yields through strategic short-term rental management. This sector provides both income diversification and capital appreciation opportunities.
It's something we develop in our Tanzania property pack.
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.
Are new infrastructure projects pushing property prices up in specific regions?
Major infrastructure projects are creating localized property price surges, particularly in areas adjacent to transportation and development corridors.
New roads, port expansions, and airport upgrades in Dar es Salaam, Zanzibar, and Dodoma correlate directly with property appreciation in surrounding areas. Areas like Kariakoo and Kigamboni benefit from transit improvements and redevelopment initiatives.
Properties adjacent to transit corridors or redevelopment zones typically outpace citywide averages in appreciation as they become more accessible and developable. Investors actively target these areas for both capital appreciation and rental income potential.
Port expansions and airport improvements create commercial opportunities that drive both residential and commercial property demand. The government's infrastructure investment strategy continues to create new hotspots for property appreciation across the country.
What are the current rental yields for apartments, houses, and commercial spaces in Dar es Salaam and Arusha?
| Property Type | Dar es Salaam Yields | Arusha Yields |
|---|---|---|
| Prime Area Apartments | 6-9% | 5-7% |
| Standard Apartments | 7-10% | 6-8% |
| Urban Houses | 5-8% | 5-8% |
| Commercial Properties | 8-12% | 7-10% |
| Tourist Zone Commercial | 10-12% | 8-12% |
| Business District Commercial | Up to 12% | Up to 10% |
| Mixed-Use Properties | 6-10% | 6-9% |
How affordable are mortgages today, and have interest rates changed recently?
Mortgage affordability has improved significantly in Tanzania, though rates remain high by international standards.
Interest rates dropped substantially to approximately 15% in 2025, down from previous levels of 22%, representing a major improvement in accessibility for property buyers. This rate reduction has expanded the pool of qualified buyers and contributed to property price increases.
The government has increased the number of approved mortgage lenders, creating more competition and options for borrowers. This increased competition is gradually pushing rates lower and improving loan terms and conditions.
Despite improvements, mortgage rates remain high compared to global standards, limiting affordability for lower-income buyers. However, the expanded access has helped lift both homeownership rates and property values as more buyers can qualify for financing.
It's something we develop in our Tanzania property pack.
Are construction costs rising or falling, and how does this affect property prices?
Construction costs have been rising since 2023, creating upward pressure on new property prices and overall market values.
Residential construction costs increased 5-7% in 2024-2025, primarily driven by higher material prices including concrete, steel, and imported components. Developers struggle to maintain stable pricing amid these cost pressures.
End-user house costs are trending upward, especially for concrete-heavy multi-story buildings that require more expensive materials and specialized construction techniques. This affects both new development costs and renovation expenses for existing properties.
Rising construction costs limit new supply delivery, contributing to supply-demand imbalances that support property price appreciation. Developers are forced to target higher-end markets where profit margins can absorb increased costs.
What do major real estate agencies predict for Tanzania property price trends in 2025?
Major Tanzanian real estate agencies and market analysts predict continued strong growth with annual price appreciation of 3-7% for Dar es Salaam and Zanzibar through 2025 and beyond.
Industry reports emphasize strong rental and capital gains potential, with increasing focus on affordable housing, mid-range developments, and tourist-oriented properties. The tourism recovery and infrastructure development support optimistic long-term projections.
Urbanization trends, infrastructure upgrades, and favorable investor policies are expected to support the sector's strong trajectory into 2026. Analysts particularly highlight the potential for continued foreign investment and tourism growth.
Market specialists predict that supply constraints and continued demand growth will maintain upward pressure on prices, making Tanzania an attractive destination for both investment and personal property purchases.
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 is clearly on an upward trajectory, with strong fundamentals supporting continued price appreciation across major cities.
Foreign investment, infrastructure development, tourism growth, and improved mortgage accessibility create a favorable environment for both property investors and residents looking to purchase homes.
Sources
- Average Price per Square Meter Dar es Salaam
- Real Estate in Arusha - ExpatExchange
- Average Property Price Zanzibar
- Average Property Price Tanzania
- House Price Tanzania
- Tanzania Which Area
- Tanzania Real Estate Market
- Tanzania Price Forecasts
- Tanzania Property Forecast
- House Price Tanzania - BambooRoutes