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Zanzibar property investment 2025 is surging: Zanzibar rental yields on Paje beachfront villas for sale and Nungwi villas for sale reach 12–15%, while annual price growth averages 10% across the islands’ prime locations. Fresh 2025 data show Stone Town apartments listing at roughly US$1,000–1,500/m², climbing to US$2,400–2,800/m² or more for luxury beachfront villas on the north and east coasts—numbers that continue to draw global investors seeking both strong cash flow and capital appreciation.
Villas are fetching gross yields of 12–15%, while well-located urban apartments still deliver a healthy 10–12%. Foreign buyers now drive nearly one-third of transactions, encouraged by large-scale projects such as the 240-unit Nungwi resort complex and the landmark 138-unit “BURJ Zanzibar” tower in Fumba Town.
Although construction costs have risen to around US$800–900 per m² and mortgage rates hover near 17%, the combination of robust tourism, limited prime coastline and a development pipeline of just 500–800 new units keeps the supply-demand balance firmly in favor of investors.
Zanzibar property prices 2025 continue to diverge sharply by location: Stone Town’s UNESCO-listed core still offers the island’s most affordable entry point, while north-coast Nungwi and the kite-surf haven of Paje command true resort premiums. Typical asking prices quoted below refer to built floor area, not land, making it easier to benchmark returns against construction costs and rental yields.
Restored coral-stone buildings inside the historic quarter list from US$1,300–1,800/m² for unfurnished walk-ups, but fully renovated “move-in ready” lofts in prime lanes now advertise above US$3,000/m²—a figure echoed by city-centre cost-of-living data that pegs average sale prices at US$3,088/m². Inventory is tight (many buildings are family-held), so well-priced stock trades quickly; buyers looking for short-let layouts increasingly compete with boutique-hotel operators, adding upward pressure to headline numbers. Expect slightly wider spreads for shell-condition units that need structural work, yet renovated heritage condos remain Zanzibar’s best-value play for capital appreciation.
Blessed with year-round swimmable beaches, Nungwi posts some of the island’s fastest sell-through times. Beach-adjacent apartments change hands at US$1 800–2 500/m², while detached villas with pools generally list between US$2 000–2 800/m². Recent evidence: a newly built 300 m², six-bedroom villa five minutes from Nungwi beach is offered at US$436 000—≈US$1 855/m², illustrating the low end of today’s luxury spectrum and leaving headroom for premium, direct-beachfront deals. Buyers should budget an extra 10–12 % for closing, fit-out and ZIPA transfer fees, but strong holiday demand means well-managed stock rarely sits vacant for long.
Kite-surf capital Paje remains the east coast’s price leader thanks to its deep lagoon and growing nightlife scene. Entry-level resort apartments start around US$1 700–1 900/m², yet true beachfront villas regularly push US$2 200–2 500/m². A live listing for a turnkey two-bedroom, 116 m² pool villa is priced at US$259 000 (≈US$2 233/m²)—exactly in line with the upper quartile of current valuations. Limited shoreline plots, coupled with a rising pipeline of boutique developments, suggest east-coast values will keep pacing ahead of inflation as long as tourism arrivals hold their current trajectory.
Zanzibar property price growth has compounded robustly since 2019, with prime resort zones outpacing the historic core. Understanding these trajectories is essential for sizing future upside and timing entries into the market.
Analysis of listing archives, broker deed records and ZIPA transaction data shows an island-wide compound annual growth rate (CAGR) of ≈10% between 2019 and 2024. The headline figure masks significant sub-market dispersion:
This five-year climb translates to a price-index move from 100 in 2019 to roughly 160 in 2024 for the wider market, and to ≈176 in Paje/Nungwi.
Forward-looking forecasts compiled by leading local analysts outline three plausible paths for 2025-26 Zanzibar real estate prices:
Even in the conservative bear view, prices keep climbing in nominal terms—reflecting constrained coastline, expanding expat demand and Zanzibar’s strategic “Blue Economy” incentives that continue to channel capital into hospitality-adjacent housing. The upside bull scenario hinges on signature projects such as BURJ Zanzibar and the 240-unit Nungwi complex completing on schedule and validating premium price points for vertical living.
Zanzibar rental yields 2025 outperform every other Indian-Ocean destination, thanks to resilient tourism demand and a chronic shortage of prime beachfront stock. Gross returns of 12–15% are routine in Paje and Nungwi, while character apartments in Stone Town still clear 6–8%—figures that eclipse Dar es Salaam’s 2–4% band and even many Indian-Ocean competitors. Importantly, hotel-sector data confirm that high season occupancy regularly exceeds 90%, giving investors the depth of demand needed to translate headline percentages into real cash flow.
Developer and brokerage surveys show that well-managed villas on the north and east coasts—especially Nungwi, Kendwa, Paje and Jambiani—command nightly rates of US$150–500 and deliver annualised yields of 12–15%. These numbers hold even after factoring full-service management fees, because nightly ADRs escalate sharply during the November-March peak, when Europe-centered holiday traffic dominates arrivals.
Restored lofts and boutique flats inside Stone Town’s UNESCO zone trade at lower ticket prices but still post 6–8% gross yields. Demand stems from long-stay consultants, NGO staff and digital nomads who prefer walkable culture over resort life. The rental season is less volatile than on the beaches, smoothing monthly cash flow—an advantage for leverage-driven buyers facing Tanzanian mortgage rates near 17%.
Occupancy swings are real, yet the ceiling is enviable. Independent hotel research shows average occupancy of 62% across 2023, with Europeans filling nearly 60% of beds. During the Christmas–New-Year rush the island’s bed occupancy rocketed to 92.4% in December 2024, selling 720 102 of the 779 216 available bed nights. Conversely, shoulder months such as March 2024 dipped to 48.5%, underscoring the need to model conservative low-season income. Savvy owners hedge by signing medium-term lets for part of the year or by bundling ancillary services (airport transfers, tours) that lift net yields without depending solely on nightly rates.
International investors frequently ask how to finance a Zanzibar property purchase without tying up 100 % cash. Two Tanzanian banks dominate the cross-border mortgage space and both will lend directly against leasehold titles, provided the buyer can document offshore income and meet local compliance rules.
NMB Bank — the country’s largest retail lender — will fund up to 90 % of the purchase price on its standard mortgage product, leaving only a 10 % deposit for well-qualified borrowers. Recent workshops with developers confirm that NMB’s headline rates have eased from the historic 17 % band to about 14-16 % in 2024-25, as the central-bank reference rate has fallen and competition for home-loan customers has intensified. Maximum tenor is 15 years, and salaried expatriates can apply if their employer provides a local guarantee or channels payroll through an NMB account.
I&M Bank Tanzania pitches its “Step-Up Home Loan” at diaspora buyers and foreign residents; it finances up to 80 % of the agreed price and stretches the repayment period to 20 years. Interest quotes sit in the mid-teens, broadly in line with the 15-19 % national mortgage range reported by the Bank of Tanzania. I&M accepts USD, EUR or TZS income streams, which helps investors who earn offshore but want a shilling-denominated asset as a partial currency hedge.
Practical underwriting tips:
All seafront and urban land in Zanzibar is ultimately government-owned; foreigners therefore buy registered 99-year leaseholds rather than freehold. Most new-build projects come with pre-approved Right of Occupancy papers vetted by the Zanzibar Investment Promotion Authority (ZIPA), simplifying bank due diligence. Key points:
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Zanzibar’s 2025-26 construction pipeline totals just 600-800 investment-grade residences, equivalent to under 3 % of the island’s current housing stock. Supply is highly concentrated:
With shoreline plots finite and large mixed-use resorts stalled, this modest pipeline ensures that demand from tourism-driven buyers will continue to outstrip new completions, reinforcing the island’s 10 %+ annual price-growth trend and keeping gross rental yields firmly in the 12-15 % bracket for beachfront stock.
Yes—because constrained new supply, 10% annual price appreciation and 12-15% gross yields on beachfront rentals create a rare mix of capital growth and cash flow. With only 600-800 new units slated to complete before 2026, demand from rising tourist arrivals and an expanding foreign-buyer base should keep upward pressure on prices. Investors who secure well-located villas or heritage apartments today are positioned to capture both rental income and further value gains as Zanzibar’s Blue-Economy push strengthens its global profile.
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The information in this article is provided for general guidance and informational purposes only and does not constitute legal, tax, or investment advice. Market statistics are drawn from third-party sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Property prices, yields, and financing terms may change without notice. Always conduct your own due diligence and consult qualified professionals before making any real-estate investment in Zanzibar or elsewhere.
Who can buy property in Zanzibar?
Foreigners can purchase real estate via 99-year leaseholds recorded at the Land Registry. The only restrictions are that the buyer must be a legally registered individual or company and the property cannot be used for agricultural purposes without extra approvals. Leaseholds are fully transferable and renewable, giving investors rights that function much like freehold in practice.
Can a foreign buyer get a mortgage in Zanzibar?
Yes. Leading banks offer up to 80-90% loan-to-value mortgages to qualified non-residents, usually at interest rates of 14-17% and tenors of 15–20 years. Approval hinges on proof of offshore income, a clean credit record and a debt-to-income ratio below 40%. Expect 4–6 weeks for underwriting and budget about 2% in bank arrangement and legal fees.
What taxes and fees apply when buying property?
Transaction costs total roughly 3–5% of the agreed price:
How long does the buying process take?
A straightforward cash purchase typically closes in 4–8 weeks once the buyer’s lawyer confirms title and the Land Registry issues a new lease certificate. Mortgage-backed deals add 2–3 weeks for bank valuation and loan processing.
What rental-management options exist?
Owners can self-manage, hire a local agent for 15-20% of gross revenue, or place the unit in a resort’s guaranteed-yield pool that pays 6-10% net after costs. Villas along Paje, Nungwi and Kendwa beaches see the highest occupancy, especially when bundled with concierge and tour services.
Are there currency-exchange or repatriation limits?
No. Zanzibar operates under Tanzania’s Foreign Exchange Act, which allows full repatriation of rent and resale proceeds in hard currency, provided taxes are cleared and the transaction is processed through a licensed bank. Documentation of the original purchase remittance is essential to avoid delays when sending funds out.
