Positive market forecasts for Tanzania are driven by a strong economy, growing foreign investment, expanding infrastructure and urbanization. The country ranks second in Africa after Egypt in terms of demand for property by foreigners, especially Russians.
The real estate sector in Tanzania is expected to see steady growth in 2026-2030, supported by GDP growth (up to 6% by 2026 and up to 8% by 2030) and the growth of the urban population, urbanization, infrastructure expansion and investment inflows.
Foreign direct investment in the country increased from 1.3-1.6 billion USD in 2023 to 6.56 billion USD in 2024. The real estate sector contributed significantly, attracting over USD 185 million in the last months of 2024.
Investor interest is fueled by government reforms: the passage of the Tanzania Investment and Special Economic Zones Act (TISEZA) in 2025 and, before that, the National Land Policy, which allows for 99-year leases and accelerated development.
Demand
Government infrastructure projects (construction of railways and water supply) are increasing demand for housing. As a result, property prices across the country are expected to grow by 4.6% annually, with annual growth in Dar es Salaam, Tanzania's largest city, reaching 7%, and the average market value from 2024 to 2028 will be 4.7%.
Construction
The volume of the construction sector will increase from 10.7 billion USD in 2025 to 17.4 billion USD in 2030 (an average annual growth rate of 10.2%). This will be possible thanks to the development of both public infrastructure and private real estate, as well as reforms to reduce the time required to issue construction permits.
Geography of Investment
Dar es Salaam remains a key investment magnet. The coastal areas of Masaka, Oyster Bay, Mikocheni and Kigamboni will continue to attract both local and foreign investors. According to Knight Frank, property prices here range from USD 1,000 to USD 1,800/sq m, while one-bedroom apartments rent for USD 500 to USD 800 per month. The gross rental yield averages 6.8%.
Growth is also forecast in the greater Dodoma region due to the continued relocation of government agencies. Interest in the popular tourist area of Arusha will remain high (the local market shows a yield of 6-8% per year). The developing cities of Mwanza, Tanga and Singida are already benefiting from the modernization of ports and investments in industrial zones.
The famous island of Zanzibar also continues to develop, focusing on luxury real estate. Although the increase in Airbnb listings has somewhat reduced profitability, tax incentives and high levels of tourism continue to make vacation rental properties attractive for long-term investment.
Challenges
Experts see high mortgage interest rates (15-20%), rising land and construction costs, and land disputes as major risks to growth.
Analysts from Mrisho Consult note thatthe next 5 years will be critical for the future of Tanzania's real estate market. They expect growing investor interest in affordable, sustainable and mixed-use projects.
Thanks to ongoing regulatory reforms, a young and growing population, and developing infrastructure, Tanzania is well positioned to offer both significant capital appreciation and reliable income opportunities by 2030.
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