A pristine beach in Zanzibar. Tourism to this Indian Ocean paradise is surging, creating strong demand for rental villas and resorts.
Zanzibar – the semi-autonomous archipelago off Tanzania’s coast – is emerging as one of the hottest real estate markets in Africa. This tropical idyll, famed for its white-sand beaches and spice-trading history, is now drawing international property investors with an enticing mix of booming tourism, high returns, and investor-friendly policies. Below, we break down five compelling reasons why investing in Zanzibar real estate is so appealing in 2025.
Zanzibar’s tourism sector is hitting record highs, directly boosting real estate returns. The islands welcomed 736,755 international visitors in 2024, a 15.4% jump over 2023 and an all-time record. Not only are more tourists coming, they’re staying longer – an average of 8 nights per trip, nearly double the typical stay in other Indian Ocean destinations. This translates into packed hotels and vacation rentals. In fact, hotel bed occupancy peaks above 90% in high season, hitting 92.4% in December 2024. Holidaymakers from Europe dominate (over 70% of arrivals), ensuring steady demand for upscale villas and beachfront apartments.
This tourism boom provides a strong foundation for rental investments. Properties marketed as short-term holiday rentals or boutique hotel villas can achieve high occupancy rates thanks to Zanzibar’s nearly year-round travel season (with peak months in both summer and winter holidays). The government’s target of 800,000 tourists annually by 2025 is within reach, and each new flight route – nearly 88% of visitors now fly directly into Zanzibar’s upgraded airport – further tightens demand for accommodations. In short, a vibrant tourism engine keeps the rental market liquid, allowing investors to capitalize on consistent visitor flows.
One of the biggest draws for real estate investors in Zanzibar is the attractive rental yield. Thanks to surging tourist occupancy and relatively low property acquisition costs, gross rental yields on Zanzibar properties can reach impressive levels. Beachfront vacation villas in popular areas like Nungwi or Paje are fetching 14–18% annual rental yields, while well-located apartments in Stone Town or resort communities still deliver a healthy 10–12%. Even mid-market properties commonly see high-single-digit returns, which far outshine the yields in many mature markets (for comparison, prime rental yields in cities like Nairobi or Cape Town are often only ~4%).
Several factors drive these strong returns. First, robust tourist occupancy means rental income throughout the year – for example, during peak holiday months, well-managed villas and bungalows rarely sit vacant. Industry analyses forecast that “hot-season occupancy” for vacation villas will remain extremely tight, underpinning double-digit yields for buy-to-let investors. Second, operating costs and taxes are low (as discussed later), allowing owners to keep more of the rental revenue. And third, Zanzibar’s appeal as an exotic yet accessible destination allows for premium nightly rates – especially for luxury beachfront and pool villas that cater to European travelers seeking privacy and authenticity. In sum, an investment property in Zanzibar can pay for itself through rental income much faster than comparable investments in more saturated resort markets.
Investors can choose different rental strategies to maximize returns. Some opt for professional management companies that handle marketing on platforms and hotel partnerships to keep occupancy high. Others target the growing “digital nomad” segment – remote workers who rent for a month or two – adding a new stream of demand in shoulder seasons. With tourism growth expected to continue on an upward trajectory, rental yields in Zanzibar are likely to remain strong, making it a compelling case for those seeking high cash-flow investment properties.
Unlike many tropical destinations, Zanzibar has very welcoming policies for foreign real estate buyers. The government has enacted reforms that make it easy – and highly profitable – for international investors to own property. Foreigners can buy titled properties on 99-year leasehold terms (initial 33-year lease, renewable up to three times), essentially giving the same rights as ownership. This long-term security is guaranteed by Zanzibar’s constitution since 2010, which opened the door to foreign ownership under the leasehold system. You can even pass a leased property to your heirs or resell it, just as with freehold, ensuring full investment flexibility.
Even more enticing are Zanzibar’s “Golden Visa” style incentives launched in recent years to lure investors. If you invest at least $100,000 in approved real estate, you become eligible for a renewable residency permit for you, your spouse, and up to four children. This investor residence permit (Class C visa) is valid for two years at a time and can be renewed indefinitely as long as you own the property – allowing you to live in Zanzibar or come and go freely without cumbersome visa runs.
The financial incentives are remarkable. Foreign investors pay virtually no property taxes – the government charges only a token $22 annual property tax per property, an almost symbolic fee. No stamp duty on the first sale, no VAT on rental income or property sales, and the right to repatriate profits freely are among the perks. Moreover, Zanzibar does not tax any worldwide income or wealth of foreign residents, meaning if you live or retire in Zanzibar, your foreign earnings remain untaxed locally. Any income generated within Zanzibar is taxed at only 15% (half the normal rate) for foreigners. Even when you eventually sell your property, the government has slashed the capital gains tax by 50% for first-time foreign buyers – so you pay only 5% tax on your gains instead of 10%. And unlike some countries that restrict ownership, Zanzibar allows 100% foreign ownership of real estate assets (through the leasehold structure), with all purchases registered via the Zanzibar Investment Promotion Authority to streamline the process.
These investor-friendly laws create a very attractive climate. Essentially, Zanzibar offers a combination of long-term ownership security, residency rights, and tax holidays that few other markets can match. For international buyers, this means higher net returns and fewer bureaucratic hurdles. It’s clear the government is rolling out the red carpet – and investment is indeed pouring in as a result of these policies.
Zanzibar is not only a paradise island – it’s rapidly developing into an East African investment hub with improving infrastructure and major projects underway. The government, buoyed by tourism revenue, has been investing heavily in infrastructure: roughly $500 million has been allocated to upgrade roads, utilities, and airports in recent years. A brand-new Terminal 3 at Abeid Amani Karume International Airport opened to expand international flight capacity, and nearly 91% of visitors now arrive via direct flights, reflecting Zanzibar’s rise as a standalone destination rather than a side trip. Plans are also in motion for a $230 million new deep-water port in northern Unguja (the main island) to boost trade and logistics. These improvements not only make life easier for tourists and expats, but also signal the island’s strategic importance in the region.
At the same time, Zanzibar’s leadership has a vision to diversify the economy and become a regional business and technology hub. Initiatives like “Silicon Zanzibar” are aiming to attract tech firms and remote workers to the island’s shores. For instance, the new Fumba Town development on the southwest coast is being turned into a 1.5 km^2 modern township with 5,000 residential units, designed to host tech companies and entrepreneurs in a campus-like environment. Fumba will even feature the Burj Zanzibar, a planned 28-story timber eco-tower, set to be one of Africa’s tallest wooden buildings. The idea is that Zanzibar can leverage its idyllic lifestyle to draw talent and firms, much like Dubai or Mauritius, but within Africa – an ambition supported by generous free-zone incentives such as 10-year corporate tax exemptions and simplified work visas for new companies.
The real estate landscape is already reflecting this forward momentum. Large-scale luxury resort and residential projects are mushrooming. A prime example is Blue Amber Zanzibar, a 411-hectare waterfront resort development in the northeast that was the first to be granted Strategic Investment Status by the government. Blue Amber will feature hotels, a golf course, and private villas for sale on 99-year leases – essentially creating a new high-end community for both tourists and investors. Such projects are transforming Zanzibar’s coastlines and opening up opportunities for early investors to buy into world-class developments at comparatively low entry prices.
Overall, Zanzibar’s trajectory is clearly upward: improved transport links, modern amenities, and visionary projects are turning the once-sleepy islands into a connected hub for tourism, trade, and investment. A local real estate CEO even noted that the Zanzibari government is “very progressive in their policies” and quicker to attract foreign investment than mainland Tanzania. This pro-growth mindset means infrastructure and economic support will likely continue improving, further boosting property values and the ease of doing business. Investors who get in now effectively ride the wave of Zanzibar’s development boom.
Beyond rental income, Zanzibar properties offer excellent prospects for capital appreciation. Demand is rising fast while supply (especially of prime beachfront land) remains relatively limited – a recipe for rising prices. In 2024 alone, residential property values jumped around 10% on average, outpacing even Tanzania’s mainland market. Listings data show that beachfront land prices rose roughly 12% year-on-year in 2024, continuing a decade-long trend of ~13% annual price growth in sought-after areas like Nungwi Beach and historic Stone Town. Essentially, someone who bought a plot in a prime Zanzibar location ten years ago could have nearly tripled their investment by now just on price appreciation.
Certain hotspot locales have seen particularly robust growth. The north-coast resort village of Nungwi and the kite-surfing haven of Paje on the east coast each achieved about 11–12% compound annual price growth from 2019 to 2024. This reflects how new boutique resorts and improved roads have rapidly added value to these areas. Even Stone Town condos, constrained by UNESCO heritage rules, have seen steady appreciation (~6–7% annually in recent years) as supply is limited and buyers compete for a piece of the cultural capital. Across Zanzibar, property price indices have been on a sharp upward trajectory, and local experts forecast this climb to continue in the coming years barring any global shocks.
The growth potential is still far from saturated. Unlike over-developed island markets where prices are already sky-high, Zanzibar’s real estate is starting from a comparatively low base. For example, luxury beachfront villas here might sell for $2,200–2,800 per square meter – a fraction of the cost in parts of the Caribbean or Mediterranean, yet rising fast as more international buyers enter the market. As an investor, that means a chance to ride both high rental yields now and significant equity growth over time. Moreover, foreign buyer interest is accelerating: roughly one-third of property transactions in Zanzibar are now by overseas investors, and that share is growing each year. With the government actively courting investment and aiming to double tourism revenue, the fundamentals point to a sustained growth curve.
In short, Zanzibar offers the rare combination of immediate income generation and long-term appreciation. Whether you’re looking at a vacation rental villa, a unit in a serviced resort, or land banking a beach plot, the trend is your friend. Those who invest early in Zanzibar’s boom stand to benefit not only from ongoing development gains but also from the island’s increasing global profile – it’s being branded as the next must-visit destination, and by extension, a must-invest location in emerging market real estate.
Conclusion: From its bustling tourism trade to double-digit rental yields, tax breaks, infrastructure upgrades, and rising property values, Zanzibar checks all the boxes for a high-potential real estate investment destination. This tropical market is truly booming, backed by supportive government policies and the natural appeal that draws travelers (and your future tenants) year after year. For international investors seeking strong returns in an exotic locale, Zanzibar offers an unparalleled opportunity.
Interested in learning more about how to capitalize on Zanzibar’s growth? Be sure to check out our Invest in Zanzibar guide, which covers the practical steps and further benefits of owning property in this island paradise. With the right investment, you could not only own a slice of paradise but also secure a profitable asset in one of the world’s most exciting up-and-coming markets.
