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Property prices in Zanzibar are experiencing steady growth, with annual appreciation rates of 5-7% across the island and even higher increases in luxury beachfront areas.
As we reach mid-2025, Zanzibar's real estate market continues its upward trajectory, driven by booming tourism, infrastructure investments, and strong foreign investment. The island welcomed over 1 million tourists in 2024, creating robust demand for both residential properties and vacation rentals.
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.
Zanzibar's property prices have increased by 5-7% annually as of June 2025, with beachfront properties experiencing even steeper rises of 10-15% in prime locations like Nungwi and Jambiani.
The market is fueled by tourism growth, government incentives, and infrastructure upgrades, though some luxury segments may face oversupply risks by 2026.
| Property Type | Current Price Range | Annual Appreciation | Forecast 2026 |
|---|---|---|---|
| Beachfront Villas | $325,000 - $2M+ | 10-15% | +6-8% |
| City Apartments | $58,000 - $150,000 | 3-7% | +4-5% |
| Coastal Plots | $23-35 per sqm | 7-10% | +5-7% |
| Luxury Apartments | $150,000 - $500,000 | 7-10% | +3-5% |
| Rural Properties | $50,000 - $200,000 | 5-7% | +5-6% |
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.
Fact-checked and reviewed by our local expert
Grace Makoye 🇹🇿
Manager of Operations, Zinza Real Estate
How much have property prices increased in Zanzibar over the past year?
Zanzibar's property market has shown remarkable growth, with average residential prices increasing by 5-7% annually across the island as of June 2025.
The most dramatic increases have occurred in beachfront properties, where prices surged by 15% over the past year. Prime coastal areas like Nungwi, Jambiani, and Matemwe are experiencing appreciation rates of 10-15% annually, driven by luxury developments and strong tourist demand. This growth significantly outpaces the mainland Tanzania market, which saw more modest increases of 3-4%.
Several factors are fueling this upward trend in the Zanzibar property market. The island welcomed over 1 million tourists in 2024, up from 538,264 in 2019, creating unprecedented demand for vacation rentals and second homes. The government's $500 million infrastructure investment program, including road improvements and utility upgrades, has made previously inaccessible areas attractive for development.
Mid-range properties in urban areas have seen more moderate but steady growth of 3-7% annually. A typical three-bedroom house in Zanzibar now costs around $150,000, compared to $140,000 a year ago. City apartments averaging 60 square meters have increased from approximately $54,000 to $58,000, reflecting growing demand from the expanding middle class.
It's something we explore in detail in our Tanzania property pack, where you'll find comprehensive market analysis and investment strategies.
Which areas of Zanzibar are seeing the biggest price increases?
The northern coastal regions of Zanzibar are experiencing the most significant price appreciation, with Nungwi leading the charge.
Nungwi has become the epicenter of luxury development, with property values often doubling within three to four years for new projects. The area's pristine beaches and proximity to high-end resorts like the upcoming Anantara Zanzibar Resort (a $230 million project opening in 2027) have created a premium market where beachfront villas now start at $325,000.
| Location | Price Increase (Annual) | Property Type Focus | Key Driver |
|---|---|---|---|
| Nungwi | 10-15% | Luxury villas, resorts | Premium tourism, international hotels |
| Matemwe | 8-12% | Boutique resorts, villas | European tourist demand |
| Jambiani | 7-10% | Mixed developments | Kitesurfing tourism |
| Michamvi | 8-10% | Secluded luxury properties | Azure development project |
| Paje | 5-7% | Commercial, apartments | Nightlife and restaurants |
| Stone Town | 6-8% | Heritage properties | Cultural tourism |
| Makunduchi | 4-6% | Affordable plots | Infrastructure improvements |
Michamvi deserves special mention as an emerging hotspot. The Azure development, featuring 54 luxury villas with private pools, has transformed this previously quiet area into a sought-after destination. Property prices here have jumped significantly, though specific plots remain more affordable than in established areas like Nungwi.
Stone Town and Jambiani are also experiencing faster-than-average price growth due to their unique appeal. Stone Town's UNESCO World Heritage status and historical significance attract cultural tourists and investors seeking heritage properties. Meanwhile, Jambiani's reputation as a kitesurfing paradise has driven demand for beachfront investments.
What types of properties are experiencing the highest price growth?
Beachfront villas and luxury apartments are leading the market with the highest appreciation rates in Zanzibar.
Luxury beachfront properties are seeing extraordinary growth of 10-15% annually, particularly in northern coastal areas. These properties command premium prices due to their scarcity and high rental yields, which can reach up to 12% for well-located villas. The combination of stunning ocean views, private beach access, and strong vacation rental demand makes these properties highly sought after by international investors.
Eco-friendly developments represent another fast-growing segment, with approximately 30% of new residential projects in 2025 incorporating sustainable features. These properties are attracting premium prices as environmentally conscious buyers seek homes that align with their values. The government's "Greener Zanzibar" campaign and various incentives for sustainable development have accelerated this trend.
Mixed-use developments in tourist areas are also experiencing robust price growth of 7-10% annually. These projects, which combine residential units with commercial spaces, benefit from multiple revenue streams and appeal to investors seeking diversified returns. Areas like Paje, with its vibrant nightlife and restaurant scene, have seen particular success with this property type.
Rural and coastal homes outside major tourist centers are appreciating at a steady 5-7% per year. These properties benefit from the island-wide shift toward coastal living and offer more affordable entry points for buyers. The ongoing infrastructure improvements, including the Tunguu-Makunduchi road transformation, are making these areas increasingly accessible and attractive.
What are current property prices in Zanzibar as of June 2025?
As of June 2025, Zanzibar's property market offers diverse price points catering to different investment levels and buyer preferences.
Coastal plots, which represent the foundation of many development projects, are currently priced between $23-35 per square meter in prime areas like Kiwengwa, Matemwe, and Pemba. This represents a significant increase from $18-24 per square meter in 2019, demonstrating the steady appreciation in land values. In comparison, similar plots in Michamvi can command significantly higher prices, with some reaching $450 per square meter for premium beachfront locations.
Residential apartments in Zanzibar show considerable price variation based on location and quality. In Zanzibar City Centre, prices average around TZS 100,000,000 per square meter for new luxury developments, while properties outside the center are more affordable at TZS 30,000,000 per square meter. A typical 60 square meter apartment averages TZS 150,000,000 (approximately $58,000), making it accessible to middle-class buyers.
The luxury villa market starts at approximately $325,000 for premium beachfront properties in areas like Nungwi, with prices escalating to over $2 million for expansive estates with private beaches. Three-bedroom houses in established neighborhoods average $150,000, while smaller two-bedroom properties can be found from $80,000 in developing areas.
Commercial properties, particularly those in tourist hotspots like Paje, command premium prices. An entire building with multiple units and commercial spaces in prime locations can be priced around $265,000 to $1.1 million, depending on size and revenue potential. These properties often come with established rental income, making them attractive to investors seeking immediate returns.
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What do property price forecasts predict for Zanzibar in 2026?
Property prices in Zanzibar are forecast to continue rising in 2026, with expected appreciation rates of 4-6% across most market segments.
Market analysts predict that beachfront properties will moderate their growth to 6-8% in 2026, down from the current 10-15% annual increases. This slowdown reflects market maturation and potential oversupply in luxury segments, particularly as major projects like the Anantara Zanzibar Resort come online. However, prime locations in Nungwi and Matemwe are expected to maintain stronger appreciation due to limited beachfront availability.
Urban and mid-range properties are projected to see steady growth of 4-5% in 2026, supported by continued urbanization and middle-class expansion. The Zanzibar metro area population is expected to reach 874,000 by 2025, creating sustained demand for affordable housing. Government initiatives through the Zanzibar Housing Corporation will help balance supply and demand in this segment.
Several factors support these positive forecasts for the Zanzibar property market. The tourism sector's continued growth, with projections exceeding 1.2 million visitors by 2026, will maintain demand for vacation rentals and investment properties. Infrastructure improvements, including the ongoing $500 million upgrade program, will open new areas for development and enhance property values in previously underserved regions.
However, investors should be aware of potential headwinds. The luxury rental market may face oversupply risks, with 317 active Airbnb listings as of late 2024 and more properties entering the short-term rental market. Some areas have already seen rental rate reductions of up to 50% over the past two years, suggesting the need for careful market selection and realistic yield expectations.
How do Zanzibar property prices compare to mainland Tanzania?
Zanzibar property prices generally command a premium over mainland Tanzania, particularly for beachfront and tourist-oriented properties.
In terms of purchase prices, Zanzibar's city center properties average TZS 100,000,000 per square meter for premium developments, significantly higher than Dar es Salaam's average of TZS 60,000,000 per square meter. However, this comparison primarily reflects Zanzibar's focus on luxury and tourist-oriented developments rather than a direct like-for-like comparison.
| Location | Average Price/sqm | 3-Bed House Price | Rental Yields |
|---|---|---|---|
| Zanzibar (Beach) | $200-500 | $325,000+ | 6-12% |
| Zanzibar (City) | $100-300 | $150,000 | 5-8% |
| Dar es Salaam | $80-250 | $120,000 | 4-7% |
| Arusha | $60-180 | $90,000 | 4-6% |
| Mwanza | $50-150 | $75,000 | 3-5% |
The rental market shows interesting dynamics between Zanzibar and the mainland. While Dar es Salaam commands higher monthly rents for comparable properties due to its status as the commercial capital, Zanzibar offers superior rental yields thanks to its tourism-driven short-term rental market. A typical two-bedroom apartment in Dar es Salaam might rent for TZS 1,500,000 per month, while a similar property in Zanzibar could generate TZS 3,000,000 or more through vacation rentals.
Zanzibar's property market benefits from unique advantages that justify its premium pricing. The island's tourism appeal, with over 1 million annual visitors, creates demand that mainland cities cannot match. Additionally, Zanzibar's special economic status and investor-friendly policies, including 100% foreign ownership rights and tax incentives, make it more attractive to international buyers than mainland markets.
We provide detailed comparisons and market analysis in our Tanzania property pack, helping investors understand regional differences and opportunities.
What impact is tourism having on Zanzibar property prices in 2025?
Tourism is the primary driver of Zanzibar's property price growth, with the sector's expansion directly correlating to real estate appreciation.
The tourism boom has been remarkable, with visitor numbers surpassing 1 million in 2024, nearly doubling from 538,264 in 2019. This surge has created unprecedented demand for accommodation, pushing up property values across the island. Average daily tourist spending has increased from $263 in 2019 to $350 in 2025, with visitors staying an average of 8 days, injecting substantial capital into the local economy.
Short-term rental yields have become particularly attractive due to tourism growth. The average Airbnb host in Zanzibar earned approximately $7,000 in 2023, making vacation rental properties highly profitable investments. Properties in prime tourist areas like Nungwi and Paje can achieve occupancy rates of 75% during regular seasons and up to 90% during peak periods, generating rental yields of 6-12%.
The hotel and resort development boom reflects tourism's impact on the broader property market. Over 60 new hotels and resorts have been constructed in the last decade, with major international brands like Four Seasons and Anantara establishing presence. These developments not only increase property values in surrounding areas but also improve infrastructure and amenities that benefit all property owners.
Tourism's influence extends beyond direct accommodation demand. The sector has spurred development of supporting infrastructure, including restaurants, shops, and entertainment venues, creating a multiplier effect on property values. Areas that were previously underdeveloped, like Michamvi and Matemwe, have transformed into premium real estate markets thanks to tourism-driven investment and the arrival of luxury resort brands.
We made this infographic to show you how property prices in Tanzania compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It's an easy way to spot where you might get the best value for your money. We hope you like it.
Are there any areas where property prices are declining or stable?
While most of Zanzibar experiences price growth, urban apartments and some western regions show signs of stabilization or slight decline.
Urban property markets, particularly in densely populated areas like Mjini Magharibi, are experiencing price stabilization or modest declines of 1-3% annually. This area houses half of Zanzibar's population and faces infrastructure strain, with 669 people per square kilometer creating challenges for basic services like water and electricity. The shift in buyer preference toward coastal and rural properties has reduced demand for urban apartments.
The luxury rental segment in certain overdeveloped areas is showing signs of saturation. Some neighborhoods have experienced rental rate reductions of nearly 50% over the past two years due to oversupply. With 317 active Airbnb listings as of late 2024 and more properties entering the market, competition has intensified, leading to downward pressure on both rental rates and property values in these segments.
Southern Zanzibar presents a different dynamic, with slower appreciation rates of 2-4% annually compared to the booming north. The infrastructure gap between north and south significantly impacts property values, with southern areas lacking the tourism amenities and international resort presence that drive prices in northern locations. While this creates opportunities for value investors, it also means slower capital appreciation.
Commercial properties in non-tourist areas are experiencing minimal price growth or stagnation. Without the tourism-driven demand that supports coastal markets, these properties rely solely on local economic activity, which has grown more slowly. Investors focusing on these areas should prioritize cash flow over capital appreciation and carefully assess local market fundamentals.
What government policies are affecting property prices in 2025?
Government policies in Zanzibar strongly favor real estate investment, creating a supportive environment for property price appreciation.
The Zanzibar Investment Act of 2023 introduced game-changing incentives for property investors. Foreign investors now enjoy a 15-year corporate tax exemption for strategic projects, 100% capital gains tax exemption on real estate investments, and the ability to obtain residency permits with investments of $100,000 or more. These policies have significantly increased foreign direct investment, with a 15% rise in FDI during 2023 alone.
| Policy/Initiative | Key Benefits | Impact on Prices |
|---|---|---|
| Zanzibar Investment Act 2023 | 15-year tax exemption, 100% foreign ownership | +20% foreign investment increase |
| Infrastructure Program | $500 million in roads, utilities, airports | +5-7% in improved areas |
| REDA Launch 2025 | Market transparency, investor protection | Increased buyer confidence |
| Condominium Act | Legal framework for shared ownership | New development opportunities |
| Greener Zanzibar Campaign | Incentives for eco-developments | Premium pricing for green properties |
| Tourism Development Plan | Marketing, infrastructure support | Sustained demand growth |
| Housing Corporation | Affordable housing initiatives | Balanced mid-market supply |
The launch of the Real Estate Developers Association Zanzibar (REDA) in 2025 has improved market transparency and investor protection. Combined with the activation of the Condominium Act, these regulatory improvements have increased buyer confidence and facilitated more sophisticated property developments. The legal framework now provides clear guidelines for property ownership, transfers, and dispute resolution.
Infrastructure investment represents another crucial government initiative impacting property values. The $500 million program targeting roads, utilities, and airport improvements has made previously inaccessible areas attractive for development. The Tunguu-Makunduchi road transformation alone has increased property values by 5-10% in affected areas by improving connectivity and reducing travel times.
How do rental yields affect property price trends in Zanzibar?
High rental yields in Zanzibar are a key factor driving property price appreciation, with returns significantly exceeding regional averages.
Zanzibar's rental yields range from 6-8% for standard properties, with luxury beachfront properties achieving up to 12% returns. These yields substantially exceed mainland Tanzania's average of 4-7%, making Zanzibar properties particularly attractive to yield-focused investors. The short-term vacation rental market is especially lucrative, with average daily rates significantly higher than long-term rental options.
The relationship between rental yields and property prices creates a positive feedback loop in Zanzibar's market. High tourist demand ensures strong occupancy rates averaging 75%, with peak season rates reaching 90%. This reliable income stream justifies higher property valuations and attracts more investors, further driving up prices. Areas with the highest rental yields, such as Nungwi and Paje, also experience the steepest price appreciation.
Digital platforms have revolutionized the rental market, making it easier for property owners to access global tourists. The average Zanzibar Airbnb host earned $7,000 in 2023, demonstrating the platform's impact on rental income potential. This accessibility has encouraged more investors to enter the market, viewing Zanzibar properties as income-generating assets rather than mere capital appreciation plays.
However, rental yield compression in some areas signals market maturation. Oversupply in certain luxury segments has led to rate reductions of up to 50% in specific neighborhoods, affecting property valuations. Investors must now be more selective, focusing on unique properties or underserved market segments to maintain attractive yields. This evolution indicates a market transitioning from rapid growth to more sustainable, selective appreciation.
What risks could impact property prices in Zanzibar?
Several risk factors could potentially slow or reverse Zanzibar's property price growth trajectory.
Climate change represents the most significant long-term threat to Zanzibar's coastal property market. Rising sea levels, coastal erosion, and extreme weather events pose direct risks to beachfront properties that command the highest prices. The government's climate adaptation report highlights these vulnerabilities, and insurance costs for coastal properties are already increasing. Properties in low-lying areas face the greatest exposure to these environmental risks.
Market oversupply in luxury segments presents an immediate concern. With major projects like the $230 million Anantara Resort and 60+ new hotels built in the last decade, certain areas risk saturation. The luxury rental market already shows stress signs, with some neighborhoods experiencing 50% rental rate declines. If tourism growth slows or reverses, these properties could face significant value corrections.
Currency volatility and inflation pose risks for both local and foreign investors. The Tanzanian Shilling's fluctuations can erode returns for international investors, while inflation averaging 5.3% affects purchasing power and development costs. These macroeconomic factors could dampen demand, particularly from foreign buyers who account for a significant portion of premium property purchases.
Political and regulatory changes remain potential wildcards. While current policies strongly favor investment, future administrations could alter tax incentives, foreign ownership rules, or development regulations. The tourism sector's vulnerability to global events, as demonstrated during previous economic downturns, means property values tied to tourist demand face inherent volatility. Investors should factor these risks into their long-term planning and valuati