Buying a property with R&R German Group will give you more than only a Residential Permit In Zanzibar but also an amazing opportunity to financial growth as well. You can aquire up to 12% Return on Capital per year. Here is an estimated calculation for our Marumbi Village Villa...
visit us www.zanzibardreamproperties.com or write us an email @ info@rrgermangroup.com
Do not hesitate to ask us anything you want to know about your Investment In Zanzibar Dream Properties with R&R German Group Ltd.
Update 19. August 2024
Why invest in R&R German Group properties in Zanzibar?
Zanzibar, an idyllic archipelago off the coast of Tanzania, has become significantly more attractive to property investors in recent years. The unique combination of beautiful beaches, cultural wealth and growing tourism makes Zanzibar a promising destination for investing in property. The island attracts not only holidaymakers but also investors looking for lucrative returns and potential capital growth.
The combination of stunning nature, cultural diversity and a rapidly growing tourism industry makes Zanzibar a promising destination for investing in property. In this article, we will look at the reasons for investing in Zanzibar, the development of the tourism industry and provide an example calculation showing how much an investor could lose if they leave their capital in a bank account instead of in property in Zanzibar.
Development of the tourism industry
Zanzibar has seen a significant increase in tourist arrivals in recent years. Between 2010 and 2019, the number of annual tourists increased from around 250,000 to over 600,000. This development was favored by various factors, including infrastructure improvements, a growing number of direct flights and interest in sustainable and cultural tourism.
The tourism industry has recovered quickly despite the challenges posed by the COVID-19 pandemic. Demand for accommodation, especially in the premium segment, is growing continuously. This creates a strong demand for rental properties, which represents stable and attractive sources of income for real estate investors.
Future development of tourism
The future of tourism in Zanzibar looks promising. Experts predict that visitor numbers will continue to rise sharply over the next few decades. The driving forces behind this positive development include:
Investment in infrastructure: The government has announced extensive investments in infrastructure, including the construction of new roads, airports and ports. This will improve the island's accessibility and attract more tourists.
Sustainable tourism: Zanzibar is increasingly focusing on sustainable tourism, which will lead to a higher demand for exclusive, environmentally friendly accommodation.
Expansion of flight options: With the increasing number of international flight connections, the island will become even more attractive to travelers from all over the world.
Economic advantages of investing in Zanzibar
Investing in real estate in Zanzibar offers significant advantages compared to many other destinations:
High returns: Thanks to the rapidly growing tourism market, rental income on the island is attractive. Holiday accommodations generally generate a higher return than in many established markets.
Low entry costs: Compared to other popular destinations such as the Maldives or the Seychelles, the entry costs in Zanzibar are still relatively low.
Increase in property value: The demand for property, especially in tourist-attractive areas, is driving up prices. The potential for an increase in value is therefore considerable.
Reasons to invest in Zanzibar
1. Growing tourism: The tourism industry in Zanzibar is growing steadily. With the recovery of the international travel market after the pandemic, Zanzibar is seeing an increasing number of tourists demanding high-quality accommodation. This development increases the demand for rental properties, which ensures stable and attractive rental income for investors.
2. Rising property values: Property prices in Zanzibar are still moderate by international standards, but the market is developing dynamically. Purchasing real estate during a growth phase can lead to significant increases in value.
3. Benefits for foreign investors: The Zanzibar government welcomes foreign investment and provides appropriate conditions, including tax incentives and a stable political environment.
4. Inflation protection: Real estate investments are considered relatively inflation-proof, as property values and rents tend to rise with inflation. This protects the invested capital from loss of purchasing power.
Example calculation: Real estate investment vs. bank account
Suppose an investor has capital of €100,000 and is considering either investing it in a property in Zanzibar or leaving it in a bank account.
Assumptions:
Purchase price of the property: €100,000
Annual rental income: 8% of the purchase price = €8,000
Increase in value of the property: 5% per year
Costs for maintenance and administration: 2% of the purchase price per year = €2,000
Inflation rate: 3% per year
Interest rate on the bank account: 0.5% per year
Scenario 1: Investing in a property
After one year, the investor would have:
Rental income: €8,000
Increase in value of the property: €5,000
Deduction for costs: -€2,000
Total value of the investment: €111,000 + €8,000 rental income = €119,000
After taking inflation into account:
Real value of the investment: €119,000 / (1 + 0.03) = 115,534 €
Scenario 2: Capital remains in the bank account
After one year, the investor would have:
Interest gain: €500
Total value of capital: €100,500
After taking inflation into account:
Real value of capital: €100,500 / (1 + 0.03) = €97,573
Comparison of the two scenarios
The potential loss from the decision to leave the capital in the bank account is:
€115,534 - €97,573 = €17,961
Now i will show a graph illustrating the difference between the two scenarios.
Graph: Comparison of the scenarios
The graph shows the inflation-adjusted capital development over five years in comparison between a real estate investment in Zanzibar and a bank account. While the real capital in the bank account loses value over time due to low interest rates and inflation, the real value of the real estate investment increases significantly, even after deducting the annual costs.
Conclusion
Investing in real estate in Zanzibar not only offers protection against inflation, but also the opportunity to achieve significantly higher returns through rental income and increases in value. Compared to passive investment in a bank account, where the capital loses value in real terms, it is clear that an active investment in real estate in Zanzibar is a promising option in the long term.
Comments