By Monique du Toit
South Africans seeking to invest in property north of the Limpopo can now do so in the idyllic Tanzanian archipelago of Zanzibar. The East African nation is, for the first time in history, allowing non-Tanzanian residents to invest in property on the tropical island. This, coupled with strong economic growth, is expected to boost the property market.
According to a 2017 Africa Report by Knight Frank, Tanzania is one of a small group of African nations to have maintained GDP growth in excess of 5% in 2016, as it is an importer of commodities, and so benefitted from low oil prices as well as growth in private consumption and investment.
Global Property Guide reports that Tanzania is experiencing large scale investment and development in real estate projects for residential, industrial and commercial purposes.
Case Study: Blue Amber Zanzibar
Blue Amber Zanzibar by Pennyroyal Ltd, is set to be the largest resort in Africa. Initially launched as Zanzibar Amber Resort in early 2017, the mixed use development spans 411 hectares of Indian Ocean coastline offering access to the Ritz Carlton and Anantara Hotels, luxury residential villas and East Africa’s first signature 18-hole golf course, designed by professional golfer and former world number one Ernie Els.
Blue Amber Zanzibar will also offer both Tanzanian and non-Tanzanian residents an opportunity to invest in premium residential property in Zanzibar.
The first residential phase, comprising 47 luxury villas set in a secure private estate with sweeping views of the ocean, lakes or golf course, is under construction and is expected to be complete by 2020.
Non-Tanzanian residents will be eligible to buy property within the luxury community on 99-year leases with the option to extend ownership by 49 years, says Saleh Said, managing director of the Blue Amber Zanzibar. Prices for villas in phase one of the Blue Amber Zanzibar start at US $672 000.
For investors, property in luxury surroundings is likely to deliver returns in line with or in excess of that in Tanzania’s capital city of Dar es Salaam. Data shows that four bedroom executive houses in prime locations within the capital garnered prime rental prices of US $4 500 per month and prime yields of 6%.
An investment also offers significant tax benefits for property owners, including a tax rate of 15% earned on local income and no tax on worldwide income. This is realized by the development’s status as a strategic investment project. Property owners will also benefit from not having to pay capital gains tax, stamp duty or inheritance tax on properties purchased.
In addition, property owners – along with spouses and children under 25 years of age – are also eligible for residence permits in Zanzibar, with residency status valid for as long as investors remain property owners.