Tanzania Property Market Trends: Where to Buy for the Best Rental Yields
Overhead Shot of Two Beach Houses in Zanzibar
"Tanzania’s property market is booming, and smart investors are cashing in on rental yields."
Tanzania’s real estate sector is evolving rapidly. With urbanization, a booming tourism industry, and government-driven infrastructure projects, the demand for rental properties is increasing. Investors looking for Tanzania real estate investment opportunities are increasingly drawn to Dar es Salaam and Zanzibar—two markets with high rental demand and strong returns.
If you’re considering property ownership in Tanzania, understanding the rental yields in Tanzania is crucial. In this guide, we’ll break down the best areas for rental property investments, key statistics, and actionable insights to help you maximize returns.
Why Invest in Tanzania’s Rental Market?
Tanzania’s economy is growing steadily, with a GDP increase of 5.2% in 2023 (World Bank). This growth, combined with increasing foreign investment and a rising middle class, is fueling the demand for quality rental properties.
Urban Migration & Housing Shortages: Dar es Salaam is one of Africa’s fastest-growing cities, with a population expected to hit 10 million by 2030 (Housing Finance Africa). More people means more renters.
Booming Tourism & Short-Term Rentals: Zanzibar welcomed over 500,000 tourists in 2023, creating high demand for vacation rentals (The African Vestor).
Government Support for Housing: Efforts to boost affordable housing in Tanzania mean more opportunities for investors to fill the housing gap.
Dar es Salaam: The King of Long-Term Rentals
The Dar es Salaam rental market is ideal for long-term investments. The city is Tanzania’s commercial hub, home to professionals, expatriates, and students—all of whom need quality housing.
Rental Yields in Dar es Salaam
According to Global Property Guide, gross rental yields in prime areas of Dar es Salaam range from 6% to 9% annually. Some of the best-performing neighborhoods include:
Masaki & Oyster Bay – High-end apartments for expats; monthly rental income: $1,500–$3,000
Mikocheni & Sinza – Mid-range apartments; rental income: $500–$1,200
Ubungo & Kigamboni – Affordable rentals in high-demand areas; rental income: $200–$600
With demand outpacing supply, rental prices are steadily increasing, making Tanzania real estate investment in Dar es Salaam highly lucrative.
Zanzibar: A Short-Term Rental Goldmine
If you're looking for high rental yields, Zanzibar real estate investment offers a unique opportunity. The island’s tourism sector is thriving, and vacation rentals are in high demand.
Zanzibar Rental Housing Yields
Short-term rentals in Zanzibar generate 8% to 12% annual rental yields, especially in popular tourist hubs (The African Vestor).
Nungwi & Kendwa – Luxury beachfront villas; nightly rates: $150–$500
Stone Town – Boutique apartments with historic charm; nightly rates: $80–$250
Paje & Jambiani – Ideal for digital nomads and surfers; nightly rates: $50–$200
With new developments catering to foreign buyers, foreign investment in Tanzania real estate is growing rapidly in Zanzibar. Investors can purchase property and lease it out through platforms like Airbnb, making passive income easy to generate.
Challenges & Risks in Tanzania’s Rental Market
While the opportunities are exciting, investors should be aware of some key risks:
Legal & Regulatory Framework: Property ownership in Tanzania for non-citizens is possible only through 99-year leaseholds, not freehold ownership (See our guide on this here).
Infrastructure Gaps: Some areas, especially outside city centers, lack reliable roads and utilities, affecting rental demand.
Taxation & Compliance: Rental income is taxed at a flat 10% rate for individuals and 30% for companies—important costs to factor into your ROI calculations (Housing Finance Africa).
That said, working with local real estate experts (like us at The Property Hub TZ) can help navigate these challenges effectively.
Where Should You Invest? Dar es Salaam or Zanzibar?
Both markets offer excellent returns, but the right choice depends on your investment strategy:
Dar es Salaam: Best for long-term rentals with an average rental yield of 6%–9%; suited for tenants that are professionals, students, and expatriates at an investment starting price of $50,000–$500,000.
Zanzibar: Best for short-term vacation rentals with an average rental yield of 8%–12%; suited for tenants that are tourists and digital nomads at an investment starting price of $100,000–$1M+.
If you're after stable, long-term rental income, Dar es Salaam is the place to be. But if you prefer high-yield, short-term rentals, Zanzibar real estate investment is the way to go.
Final Thoughts: How to Get Started
Tanzania’s rental market is thriving, and the demand for Tanzania rental housing supply is only increasing. Whether you invest in Dar es Salaam’s urban rentals or Zanzibar’s vacation homes, there’s huge potential for profit.
Ready to take the next step? Contact The Property Hub TZ for expert advice and exclusive investment opportunities. Also, check out our other articles on Tanzania property market trends and Tanzania property prices to stay ahead of the curve.
Your investment journey in Tanzania starts today!
