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Zanzibar's property market is experiencing remarkable growth with annual price increases of 8-12% and surging foreign investment interest.
The island's real estate sector is driven by strong tourism growth, government infrastructure investments exceeding $500 million, and increasing demand for luxury beachfront properties. Property prices have increased by 160% over recent years, with prime locations showing even stronger performance.
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Zanzibar's property market shows strong fundamentals with 8-12% annual growth rates and increasing foreign investment.
Prime beachfront areas like Nungwi and Kendwa are leading price appreciation while government infrastructure spending supports long-term growth prospects.
| Market Indicator | Current Status | 2030 Projection |
|---|---|---|
| Annual Price Growth | 8-12% | Continued at 8-10% |
| Prime Beachfront Land | $200-500 per sqm | $400-900 per sqm |
| Tourist Arrivals | 1+ million (2023) | 1.6+ million |
| New Housing Units | 600-800 annually | 4,000-5,000 total by 2030 |
| Rental Yields (Villas) | 6-12% | 6-10% |
| Infrastructure Investment | $500 million committed | Billions more planned |
| Market Value | Current baseline | More than double |
Fact-checked and reviewed by our local expert
Grace Makoye 🇹🇿
Manager of Operations, Zinza Real Estate
What has been the average annual property price growth in Zanzibar over the past five years?
Zanzibar's property market has delivered strong returns with average annual price growth of 8-10% across the general market.
Prime beachfront locations like Nungwi and Jambiani have experienced even stronger appreciation rates of 10-15% annually. This performance reflects the island's growing appeal as a tourism and investment destination.
The overall property price index has increased by approximately 160% over recent years, indicating sustained upward momentum. These growth rates significantly outpace inflation and most traditional investment options in the region.
As of September 2025, this trend continues with no signs of significant slowdown, supported by ongoing infrastructure development and increasing tourist arrivals.
How do current property prices per square meter compare to other major cities?
Zanzibar's residential property prices vary significantly by location, with city center apartments averaging $3,700 per square meter.
Suburban and outside-center residential properties cost approximately $1,100 per square meter, making them more accessible to local buyers and budget-conscious investors. Beachfront land in prime areas commands $200-500 per square meter, with luxury parcels in Michamvi reaching $450 per square meter.
Commercial properties in tourist hotspots range from $265,000 to $1.1 million per building, while coastal plots for commercial use cost $23-35 per square meter in standard locations.
| Location | Residential (City Center) | Residential (Suburbs) |
|---|---|---|
| Zanzibar | $3,700 per sqm | $1,100 per sqm |
| Dar es Salaam | $80-250 per sqm | Lower than Zanzibar |
| Nairobi CBD | Similar to Dar es Salaam | Below Zanzibar levels |
How many new housing units are projected for development between 2025 and 2030?
Zanzibar is projected to add 600-800 new housing units annually through 2030.
This translates to approximately 3,000-4,000 new residential units over the five-year period. The development pipeline includes both affordable local housing and luxury vacation properties targeting international buyers.
Multiple new hotel and resort projects are also underway, including several five-star luxury developments along the coastline. Government-backed incentives are encouraging expansion in both residential and hospitality sectors.
The focus remains heavily weighted toward the luxury and mid-to-high-end market segments, reflecting the strong demand from foreign investors and tourism-related development.
What percentage of buyers are foreign investors versus local residents?
The majority of new luxury and vacation home buyers in Zanzibar are foreign investors.
This trend is driven by tourism growth, government residency incentives, and the island's appeal as an investment destination. Foreign buyers particularly dominate the beachfront villa and resort property segments.
Local residents still represent the primary market for affordable and mid-range housing options. The government's policies encouraging foreign investment have created a two-tier market structure.
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Investment residency programs and favorable ownership laws for non-residents continue to attract international capital to the market.
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How has the volume of real estate transactions changed since 2018?
Real estate transaction volumes in Zanzibar have trended upward year-on-year since 2018.
This growth mirrors the dramatic 160% price index increase and reflects both increased unit sales and higher-value luxury property transactions. The market reached new highs particularly in the luxury villa and resort segment over the past three years.
Foreign buyer activity has significantly contributed to transaction volume growth, especially in beachfront and tourism-related properties. The luxury segment has shown the most dramatic increase in both transaction frequency and average values.
As of September 2025, transaction volumes continue their upward trajectory, supported by improved infrastructure and growing international awareness of Zanzibar as an investment destination.
What are the rental yields in key areas like Stone Town, Nungwi, and Kendwa?
Zanzibar's rental yields vary significantly by property type and location, with strong performance in tourist areas.
| Property Type | Stone Town | Nungwi/Kendwa |
|---|---|---|
| Apartments | 5-8% annually | 6-9% annually |
| Villas | 6-10% annually | 8-12% annually |
| Commercial Properties | 8-12% annually | 10-15% annually |
| Beachfront Rentals | N/A | 10-15% annually |
| Short-term Tourist Rentals | 7-11% annually | 12-15% annually |
The best-performing yields are typically found in Nungwi and Kendwa beachfront zones serving the short-term tourist rental market. These areas benefit from high occupancy rates during peak tourism seasons.
How many tourists visited Zanzibar in 2023 and what are the growth projections?
Over 1 million tourists visited Zanzibar in 2023, marking a significant milestone for the island's tourism industry.
Official government projections point to a 15% annual increase in tourist arrivals through 2030. This growth trajectory anticipates tourism reaching 1.2 million visitors by 2026.
By 2030, tourist arrivals could potentially exceed 1.6 million annually if current growth rates are maintained. This tourism growth directly supports demand for vacation rentals and hospitality-related real estate.
The government's tourism promotion strategies and infrastructure investments are specifically designed to support this ambitious growth target.
What are the government's foreign direct investment targets and commitments?
The Zanzibar government has set ambitious FDI targets for property and tourism sectors, supported by comprehensive policy changes.
A $500 million infrastructure investment program underpins these FDI attraction efforts. Several high-profile projects have already been announced and are in progress.
Notable commitments include a Sh60 billion (approximately $23 million USD) five-star hotel development that began construction in 2024. Multiple US-based and international investors have committed to significant projects.
It's something we develop in our Tanzania property pack.
The government's favorable ownership laws and investment incentives continue to attract international capital across multiple property sectors.
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 has the supply of luxury developments increased in recent years?
The supply of luxury beachfront villas and branded resorts has surged dramatically over the past three years.
Over 300 new luxury units have been added to the market, with several international hotel chains securing prime parcels in Nungwi, Kendwa, Paje, and Michamvi. This luxury development rate often outpaces local housing development.
International brands and developers are particularly active in the beachfront segment, creating high-end vacation properties and resort complexes. The focus on luxury development reflects both foreign investor demand and tourism industry requirements.
This supply increase has not significantly impacted luxury property values, indicating strong underlying demand in the high-end market segment.
What infrastructure projects are planned and how much investment is committed?
Major infrastructure investments exceeding $500 million USD are committed for 2023-2028, with additional billions planned for long-term expansion.
- Road upgrades across the island to improve connectivity between tourist areas and residential zones
- Port expansion at both Zanzibar and Pemba to handle increased tourism and trade volumes
- Upgrades and enlargement of Abeid Amani Karume International Airport to accommodate growing visitor numbers
- Utility infrastructure improvements including water, electricity, and telecommunications systems
- Coastal protection and environmental infrastructure projects to support sustainable development
These infrastructure improvements directly support property values by improving accessibility, utilities, and overall livability across the island.
How do mortgage rates and financing compare to regional markets?
Zanzibar banks offer mortgage rates that are generally 1-2 percentage points higher than mainland Tanzania.
However, financing options provide more flexibility for foreign investors compared to mainland Tanzania's stricter lending requirements for non-residents. This accessibility makes Zanzibar attractive for international property buyers.
Regional comparison shows Zanzibar's financing options for non-residents are among the most accessible in East Africa. Favorable ownership laws and investment incentives support this lending environment.
It's something we develop in our Tanzania property pack.
Local banks have developed specialized products for foreign property investors, including currency hedging and flexible repayment terms.
What is the projected value of Zanzibar's real estate market in 2030?
If current growth rates of 8-12% annually are maintained, Zanzibar's real estate market could more than double in value by 2030.
Conservative projections estimate the total market capitalization could exceed several billion USD, depending on continued investment levels, luxury development supply, and tourist demand growth. This projection assumes sustained tourism growth and infrastructure development.
The luxury and beachfront segments are expected to lead this growth, supported by ongoing foreign investment and tourism expansion. Government policies favoring real estate investment should continue supporting market expansion.
However, these projections depend on maintaining political stability, infrastructure development progress, and continued tourism industry growth.
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.
Zanzibar's property market presents compelling opportunities for both investors and those seeking island living.
The combination of strong price appreciation, government infrastructure investment, and growing tourism creates a favorable environment for property investment, though buyers should carefully research specific locations and property types before committing capital.
Sources
- Citizen X - Zanzibar Citizenship Investment Insights
- Vela Zanzibar - Property Investment Statistics
- The African Vestor - Zanzibar Price Forecasts
- Vela Zanzibar - Real Estate Market Outlook
- Zanzi Palms - Real Estate Market Analysis
- Property Hub Tanzania - Understanding Property Prices
- The African Vestor - Tanzania House Prices
- The Citizen - US Firm Hotel Investment