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What is happening in Zanzibar’s real estate market? Are prices going up or down? Is Zanzibar still a hotspot for foreign investors? How is the Tanzanian government impacting real estate policies and taxes in 2025?
These are the questions everyone is asking us every day—professionals, buyers, and sellers alike, from Stone Town to Nungwi and beyond. Perhaps you’re wondering the same thing.
We know this because we stay deeply connected with local professionals and people like you, diving into the Zanzibar real estate market every single day. That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market trends and dynamics.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Zanzibar will attract more foreign buyers with favorable investment conditions
Foreign buyers are increasingly eyeing Zanzibar thanks to its appealing investment conditions.
In the past few years, Zanzibar's real estate sector has seen a surge in Foreign Direct Investment, with a 20% jump in 2022 and another 15% rise in 2023. This uptick shows that international investors are gaining confidence in the region. The Zanzibar government has rolled out policies that make owning property here quite attractive. For instance, there are tax perks like a 5-year corporate tax break for strategic projects and a 100% exemption on capital gains tax for real estate and tourism investments.
Moreover, if you invest at least $100,000, you can snag a residency permit, which comes with some sweet deals like zero corporate tax for the first five years and no business license fees for the first three months. The island is buzzing with new real estate developments aimed at international buyers. Over 60 new hotels and resorts have popped up in the last decade, and a residential project in Kiwengwa sold out in just six months, showing there's strong demand.
The tourism scene is thriving, with more international visitors flocking to the island. This boom is driving up the demand for vacation rentals and beachfront properties. By 2025, Zanzibar is expected to welcome 1 million tourists, thanks to a steady 10% annual increase in tourism. This makes it a hot spot for those looking to invest in vacation homes or rental properties.
Sources: Zanzipalms, Ibrason Living
2) Zanzibar's rental yields will rise as the island gains popularity as a tourist destination
Zanzibar's popularity as a tourist hotspot is driving up rental yields.
In 2023, the island welcomed over one million tourists, surpassing the previous target of 850,000. This influx has sparked a strong demand for accommodations, especially in the short-term rental market. Visitors are drawn to Zanzibar's unique cultural charm and laid-back lifestyle, making it a magnet for expatriates and digital nomads.
The short-term rental market is booming, with occupancy rates climbing steadily. By September 2024, there were 317 active short-term rental listings, highlighting the robust demand for rental properties. This trend is not just about numbers; it's about the island's appeal and the experiences it offers.
Investors are finding short-term rentals particularly lucrative. The average daily rate for these rentals is higher than long-term options, making them a smart choice for property investors. In 2023, a typical host in Zanzibar earned around $7,000, showcasing the market's profitability.
The government is also playing a role in this boom. With incentives like a 50% exemption on capital gains and allowing 100% foreign ownership, there's been a significant increase in foreign direct investment. These policies are further boosting the rental market, making Zanzibar an attractive spot for investors.
As the island continues to grow in popularity, rental yields are expected to rise, offering promising returns for those investing in the property market. Zanzibar's blend of natural beauty and strategic incentives is creating a perfect storm for real estate growth.
Sources: Daily News, Ibrason Living
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.
3) Foreign retirees buying homes in Zanzibar will increase, affecting local housing demand
Foreign retirees are increasingly buying homes in Zanzibar, reshaping the local real estate market.
In 2023, lease prices in Stone Town rose by 6%, while beachfront properties saw a 7% increase, highlighting the growing demand. Real estate agencies are seizing this opportunity by ramping up international marketing efforts, specifically targeting retirees. This strategy is part of a broader push to attract both foreign and domestic investment, leading to more high-profile real estate projects on the islands.
One of the main attractions for foreign buyers is Zanzibar's favorable property ownership laws. These laws allow foreigners to purchase property under leasehold agreements, granting them full ownership rights over buildings and improvements. This legal framework is particularly appealing to international investors, including retirees.
Compared to other popular retirement destinations, Zanzibar's real estate remains relatively affordable. This affordability, combined with the island's natural beauty and favorable property laws, makes it an attractive option for retirees looking for a tropical and affordable place to settle down.
Real estate agencies in Zanzibar have been ramping up their international marketing efforts, specifically targeting retirees. This is part of a broader strategy to attract both foreign and domestic investment, which has led to more high-profile real estate projects on the islands.
Moreover, Zanzibar's real estate remains relatively affordable compared to other popular retirement destinations. This affordability, combined with the island's natural beauty and favorable property laws, makes it an attractive option for retirees looking for a tropical and affordable place to settle down.
Sources: Moving Countries Guide, Arab MLS, The Citizen
4) Virtual reality property tours will become more common, improving the buying experience
Virtual reality is transforming the way we buy property, making the experience more engaging and accessible.
By 2025, VR in real estate is expected to hit a market value of $2.6 billion, showing just how crucial it's becoming. This shift is part of a larger trend, as the virtual tourism market is also booming, growing from $10.52 billion in 2023 to $12.38 billion in 2024.
Virtual tours are a game-changer because they boost engagement. Listings with these tours get 87% more views, and buyers linger 5-10 times longer on these sites. They also reach 30% more potential buyers, making them 25% happier and speeding up sales by 20%.
People love the immersive experience, with 67% wanting virtual tours when checking out listings. Half of the buyers even prefer them over regular photos. Young buyers, especially those aged 18 to 34, are 130% more likely to book a showing if a virtual tour is available.
Homes with virtual tours not only sell faster but also for more money. On average, they sell for 9% more and close 31% quicker than those without.
As VR technology continues to evolve, expect it to become a staple in the property buying process, offering a more interactive and satisfying experience for everyone involved.
Sources: PhotoUp, GlobeNewswire, EZ Real Estate Tools
5) Stricter building codes will affect the cost and design of new homes
Stricter building codes in Zanzibar are set to reshape the cost and design of new homes.
These changes come as the Revolutionary Government of Zanzibar enforces tougher regulations, focusing on environmental and social standards. Developers now face higher costs to comply with these rules, which include adhering to workplace health and safety standards in every construction contract.
Adding to the financial burden is the rising price of construction materials. In Tanzania, including Zanzibar, the cost of raw materials has skyrocketed, with some seeing price hikes of up to 400%. This surge is partly because the new codes require higher-quality materials to meet the updated standards.
Architectural designs are also evolving to meet these stricter codes, which often means incorporating community-based security measures and sourcing materials from authorized suppliers. These changes add complexity and cost to the design process.
Moreover, adapting to these new codes can slow down construction timelines. Developers and contractors need time to adjust, which can further impact overall project costs.
Sources: World Bank Document, The Citizen
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6) Short-term rental yields in Paje will increase as it gains popularity with kite surfers
Paje is now a top spot for kite surfers, making it a must-visit for enthusiasts.
Thanks to its ideal conditions, Paje Beach is hailed as the best kitesurfing destination in Zanzibar. This reputation draws in a crowd of tourists eager to ride the waves, boosting the local scene.
With the sport's rise, new kite surfing schools and facilities have popped up all over Paje. Well-known places like Kite Centre Zanzibar and B4 Kitesurf Zanzibar are busy offering lessons and gear rentals to both newbies and seasoned surfers.
For property owners, short-term rentals in Paje are a goldmine. These properties are booked solid for about 150 nights a year, showing just how popular the area has become.
The demand for short-term stays is so high that the average daily rate outpaces long-term rentals. This means property owners are seeing impressive returns on their investments.
With Paje's growing fame among kite surfers, short-term rental yields are set to rise, making it an attractive option for potential buyers.
Sources: Kite Centre Zanzibar, Zanzipalms, B4 Kitesurf Zanzibar
7) Stone Town property prices will rise as heritage conservation enhances its appeal
Stone Town is becoming a hot spot for property buyers thanks to its ongoing heritage conservation efforts.
In 2024, a major project kicked off to repaint the entire town, a UNESCO World Heritage site, led by the Stone Town Authority and Infinity Group. This ambitious plan, set to last nearly three years, shows a strong commitment to preserving Stone Town's historical charm.
The government is actively promoting Stone Town's UNESCO status, which has been a big draw for tourists. Extensive media coverage has highlighted the town's cultural significance and restoration efforts, leading to a surge in tourism. By 2022, foreign tourist numbers had more than doubled from 2020, reaching over 548,503, with local tourists also surpassing 500,000.
Real estate in Stone Town is catching the eye of expatriates and investors, thanks to its culturally rich properties. Market analyses predict a growing demand for properties in historical areas like Stone Town, driven by these ongoing conservation efforts and the town's increasing appeal.
These efforts are not just about preserving history; they're making Stone Town a more attractive place to live and invest. The combination of heritage conservation and rising tourism is boosting the real estate market, making it a prime time to consider buying property here.
With all these developments, Stone Town is poised for a significant increase in property values, making it an exciting opportunity for potential buyers.
Sources: Daily News, Daily News, Real Estate Zanzibar
8) Urban property prices will slightly decline as more people opt for rural and coastal living
More people are now choosing to live in rural and coastal areas instead of bustling urban centers.
This shift is evident in places like Paje and Uroa, where there's a noticeable uptick in property sales and inquiries. Real estate agents are seeing a growing interest in these areas, driven by the allure of a relaxed lifestyle and the availability of affordable, scenic properties.
The Zanzibari government is playing a big role in this trend by investing heavily in infrastructure in rural and coastal regions. They've improved roads, utilities, and even upgraded airports, making these areas more accessible and attractive to both residents and investors. This has not only enhanced the quality of life but also boosted property values in these regions.
Tourism is also booming in these areas, with more visitors opting for rural and coastal destinations. This surge in tourism is further fueling interest in properties, as people are drawn to the idea of owning a piece of paradise.
On the flip side, urban areas are grappling with issues like congestion and pollution, which are prompting people to look for alternatives. Properties in cities are staying on the market longer, signaling a decline in demand and making rural and coastal living more appealing.
As a result, urban property prices are expected to stabilize or even see slight declines as more people make the move to rural and coastal areas, seeking more affordable and peaceful living options.
Sources: Zaneda Properties, Zanzipalms, Tanzania Odyssey
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Tanzania. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
9) Young professionals will boost demand for modern apartments in urban areas
Young professionals are flocking to Zanzibar, reshaping its housing market.
With this influx, 35% of the population now consists of young professionals, driving economic growth and changing housing demands. They're not just looking for any place to live; they want homes that match their modern, urban lifestyle.
Urbanization in Zanzibar is on the rise, with a 4.55% increase in the urban population from 2024 to 2025. This shift towards city living means a growing preference for contemporary apartments, as more people opt for the convenience and vibrancy of urban life.
Developments like Fumba Town and Chukwani Shores are stepping up to meet this demand. These projects offer eco-friendly and luxurious living spaces, perfectly catering to the tastes of young professionals. The emphasis on sustainability and community in these areas resonates with their values.
These modern housing options are not just about luxury; they reflect a broader trend towards sustainable living. Young professionals are increasingly drawn to places that offer both comfort and a sense of community, making these developments highly attractive.
As Zanzibar continues to urbanize, the demand for such modern apartments will only grow, driven by the preferences of its young, dynamic population.
Sources: UNDP, Macrotrends, The Property Hub TZ
10) Demand for retirement-friendly housing in quieter areas will rise due to an aging population
An aging population is reshaping housing demands in Zanzibar.
With 4.5% of Zanzibar's population now aged 60 and above, there's a noticeable shift towards retirement-friendly housing. This demographic change is prompting a need for homes that cater to older adults, especially in quieter, less urbanized areas.
People in Tanzania, including Zanzibar, are living longer, with life expectancy reaching 66.67 years in 2024. This increase means more years spent in retirement, driving demand for suitable living environments. Many retirees are drawn to the serene regions of Zanzibar, seeking a peaceful lifestyle away from bustling city life.
The real estate market in Zanzibar is on the rise, particularly in the residential sector. This growth is fueled by a growing middle class and increased foreign investment, indicating a rising interest in properties that meet the needs of an aging population.
As the demand for retirement-friendly housing grows, Zanzibar's real estate market is adapting. Developers are increasingly focusing on creating homes that offer comfort and accessibility for older adults, aligning with the preferences of retirees who favor tranquil settings.
For potential buyers, this trend presents an opportunity to invest in properties that not only promise a peaceful lifestyle but also cater to the specific needs of an aging demographic. The combination of a serene environment and tailored housing options makes Zanzibar an attractive destination for retirement living.
Sources: 2022 Population and Housing Census, Tanzania Life Expectancy 1950-2025, Zanzibar Real Estate Market Outlook
11) Properties near protected areas will become more desirable due to environmental conservation efforts
Environmental conservation efforts boost property desirability near protected areas.
In Zanzibar, the push for sustainable resource management, as highlighted in the Zanzibar Development Vision 2050, is making properties near protected areas more valuable. People are increasingly drawn to eco-friendly living spaces, and as these areas become more sought after, property values are likely to climb.
Eco-conscious buyers are particularly interested in properties surrounded by nature. The IUCN Zanzibar Case Study shows that the creation of Marine Protected Areas and sustainable practices is a big draw for these buyers. This trend is further fueled by the rise in tourism, which conservation efforts have helped boost, making these areas even more attractive to both tourists and potential property buyers.
Government incentives also play a role. Policies from the Zanzibar Environmental Management Act and the National Climate Change Strategy encourage eco-friendly developments near protected areas. These incentives make properties in these regions more appealing by promoting sustainable practices.
As more people look for unique and sustainable environments, the demand for properties in these areas continues to grow. This demand is not just about living in a beautiful place; it's about being part of a community that values and protects its natural surroundings.
For those considering buying property in the country, understanding these dynamics can be crucial. The combination of conservation efforts, government incentives, and a growing eco-conscious market makes properties near protected areas a smart investment.
Sources: IUCN Zanzibar Case Study, Zanzibar Development Vision 2050
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12) Remote work growth will boost demand for homes with dedicated office spaces
The shift to remote work has transformed our living spaces.
In recent years, more companies are offering remote work options, leading to a growing need for homes with dedicated office spaces. This change is evident in job postings, like a Sales Executive position in Zanzibar by Yanolja Cloud Solution, which highlights the importance of remote work capabilities.
Surveys reveal that nearly 60% of the workforce now works remotely at least part-time. This widespread shift means people need functional and comfortable workspaces at home. Consequently, the home office furniture market is booming, with sales projected to hit USD 19.73 billion by 2030.
Real estate trends show a clear preference for homes with office spaces. In places like Zanzibar, especially in Paje and Fumba Town, remote workers are actively seeking homes with reliable Wi-Fi and suitable workspaces.
These areas are becoming hotspots for remote workers, who prioritize having a dedicated office space. The demand is driven by the need for a productive environment, which is crucial for those working from home.
As more people embrace remote work, the real estate market is adapting to meet these new needs. Homes with office spaces are becoming increasingly desirable, reflecting the changing priorities of homebuyers.
Sources: Tanzajob, The Mclemore Group, Stratview Research, Melanin Travels Magic
13) Rents in Stone Town will stabilize as new housing projects satisfy growing demand
Stone Town is buzzing with new housing developments, making it an exciting time for potential property buyers.
The Zanzibar Housing Corporation is at the forefront, focusing on affordable homes for low- and middle-income families. This is part of a broader push to keep up with urban growth and ensure housing remains within reach for many. They're using smart financing and partnerships to make this happen.
On top of that, the government is pouring $500 million into infrastructure, upgrading roads, utilities, and airports. This massive investment is set to boost property values and make city life more appealing, which is great news for the real estate market.
Experts have noticed that property values in Zanzibar are climbing by 5-7% each year. This steady rise shows a healthy market where supply is keeping pace with demand. It's a sign that the area is becoming a solid place to invest.
In Stone Town, there's been a noticeable drop in rent price swings, hinting that the market is finding its footing. As more housing projects wrap up, rents are expected to stabilize, making it a promising time for renters and buyers alike.
Sources: All Africa, Zanzi Palms, Airbtics
14) New residency permits will draw more foreign property buyers
The new residency permits in Zanzibar are a huge draw for foreign property buyers.
In 2023, a new immigration act made it possible for home-buyers investing over $100,000 to get residency permits. This change has led to a big jump in interest and applications from foreign nationals.
Foreign direct investment in Zanzibar’s real estate sector saw a 20% increase in 2023, reflecting growing confidence from international investors. The property market is expected to grow by 20% annually over the next five years, thanks to the demand driven by these new residency permits.
The new immigration act is a major boost for foreign investment, resulting in a surge in real estate sales to international buyers. Media coverage has highlighted Zanzibar as a desirable spot for expatriates, attracting even more foreign buyers.
With these changes, Zanzibar is becoming a hotspot for those looking to invest in property abroad. The island's appeal is growing, and the new residency permits are a key factor in this trend.
Sources: Zanzipalms, The Citizen, Daily News
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.
15) Tax incentives for eco-friendly buildings will spur sustainable housing development
New tax incentives for eco-friendly buildings are set to significantly boost the development of sustainable housing.
In Zanzibar, the government has been busy with initiatives like "Silicon Zanzibar," aiming to attract tech talent by offering corporate tax exemptions and easier work visas. This aligns perfectly with their blue economy plan, which is all about embracing eco-friendly practices. The focus is on creating a sustainable environment that benefits both the economy and the planet.
Recently, there's been a noticeable uptick in green building projects across Tanzania, including Zanzibar. These buildings are all about energy efficiency and eco-friendly design. Take the Back2Nature Eco Resort, for example. It's a shining example of using sustainable materials, renewable energy, and smart waste management. This resort is setting the bar high for innovative green building design.
Tax incentives are making it easier for people to upgrade their homes with eco-friendly features. In Zanzibar, investors can snag corporate tax exemptions, which is a big win for those looking to dive into green technologies. This policy is not just about individual projects; it's about encouraging a widespread shift towards sustainable living.
These incentives are breaking down financial barriers, making it more appealing for homeowners and builders to go green. The idea is to create a ripple effect, where more people are inspired to adopt sustainable practices. It's a win-win situation for the environment and the economy.
Sources: Island Innovation, Constructive Voices, Zanzibar Investment Promotion Authority
16) Minimalism will boost demand for smaller, more efficient living spaces
The trend towards minimalism is on the rise, and it's reshaping how we think about living spaces.
In recent years, especially around 2023 and 2024, tiny homes and minimalist lifestyles have become incredibly popular. This shift is largely due to a growing awareness of environmental issues and a desire for financial freedom, which are concerns shared by people all over the world.
Interestingly, consumer surveys reveal that 86% of homeowners are open to the idea of buying a tiny house as their first home. This shows a strong interest in smaller living spaces, driven by the appeal of simplicity and sustainability. Plus, the economic perks, like lower utility bills and reduced maintenance costs, make these homes even more attractive.
The furniture market is also catching on, with a noticeable increase in sales of compact and multifunctional pieces. This aligns perfectly with the minimalist lifestyle, as consumers are looking for sustainable and customizable options. In places like Zanzibar, people are particularly keen on efficient and space-saving solutions.
Sources: The Business Research Company, Today's Homeowner, Fine Creek Realty
17) Jambiani will attract luxury villa buyers with improved tourism infrastructure
Jambiani is on the brink of becoming a luxury villa hotspot as Zanzibar's tourism infrastructure gets a major boost.
In recent years, the Tanzanian government has been pouring resources into the tourism sector, aiming to draw in millions of tourists and rake in substantial revenue. This includes expanding tourism products like beach and cruise ship tourism, which directly benefits areas like Jambiani. Luxury villa developments are popping up in Jambiani, such as the Jambiani Villas resort, showing a clear interest in high-end accommodations.
The number of tourists visiting Zanzibar is on the rise, and Jambiani is a key player in this growth. The island's unique appeal as one of the few destinations open during the pandemic has only added to its charm. Jambiani's allure is growing, attracting well-informed investors and affluent tourists who are drawn to its stunning beaches and vibrant marine life.
Demand for high-end accommodations in Jambiani is climbing, driven by Zanzibar's focus on luxury tourism. Positive reviews and media coverage are painting Zanzibar as a dream destination, further enhancing its reputation. Investors are taking note, seeing Jambiani as a prime spot for luxury tourism.
As tourism infrastructure continues to improve, Jambiani is becoming increasingly attractive. The combination of government investment and the natural beauty of the area is creating a perfect storm for growth. Jambiani is poised to become a luxury haven, with its pristine beaches and upscale accommodations.
With the Tanzanian government's commitment to boosting tourism and the ongoing development of luxury villas, Jambiani is set to shine. The future looks bright for this coastal gem, as it becomes a sought-after destination for luxury travelers.
Sources: Jambiani Villas, Daily News, Luxury Tribune
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18) Zanzibar's housing needs will diversify with the growing expatriate community
The growing expatriate community in Zanzibar is leading to more diverse housing needs.
With the metro area population of Zanzibar at 800,000 in 2023, it's expected to hit 874,000 by 2025. This rise is largely due to the influx of expatriates, who are bringing a mix of nationalities and lifestyle preferences. This diversity is reshaping the housing market, as developers aim to meet the varied demands of these new residents.
Real estate reports highlight a surge in sales and rentals to expatriates. Developments like Shivo's in Paje are drawing attention with their luxurious chalet villas and apartments. These properties are designed to appeal to the tastes of international buyers, offering a blend of comfort and style.
Expatriates often seek specific types of housing, such as villas, apartments, and gated communities. New residential projects are springing up to cater to these preferences. Shivo's developments in Paje, for instance, feature a gated community with unique architectural designs and 24/7 security, ensuring a safe and appealing environment for expatriates.
As the expatriate community grows, so does the demand for diverse housing options. This trend is evident in the increasing number of properties tailored to meet the needs of this international crowd. The real estate market is evolving, with developers keen to attract expatriates by offering a range of housing solutions.
In summary, the influx of expatriates is not just boosting the population but also transforming the housing landscape in Zanzibar. With a focus on luxury and security, developers are creating homes that cater to the diverse tastes and needs of this growing community.
Sources: Macrotrends, By Shivo
19) High-net-worth individuals will increasingly favor luxury beachfront villas
Luxury beachfront villas are catching the eye of wealthy buyers for a variety of reasons.
There's a noticeable uptick in the global luxury real estate market, with sales of high-end single-family homes rising sharply in 2024 compared to the previous year. This surge highlights a growing appetite for upscale properties.
Many affluent individuals are also exploring investment opportunities in emerging markets, and Zanzibar stands out as a prime choice thanks to its booming tourism sector. The archipelago has seen a remarkable influx of visitors, with over a million tourists, including a significant increase in international arrivals from 2020 to 2022.
Infrastructure development in Zanzibar, like the expansion of hotel accommodations, has boosted property values, making it an even more enticing spot for luxury investments. Surveys reveal that beachfront properties are particularly appealing, offering a unique blend of open space, tranquility, and opulence.
These villas not only promise a lavish lifestyle but also serve as a smart investment, especially in places where tourism is thriving. The allure of owning a piece of paradise is undeniable, and the demand for such exclusive properties is only expected to grow.
Sources: Luxury Roundtable, Daily News, Proven Partners
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.