The Daily Telegraph - Saturday - Money
Paradise island with 66pc property returns
How a British couple avoided lockdown in Africa and then started investing in Zanzibar. By Adam Edwards
John and Bronwen Vearncombe never planned to become property developers in Zanzibar. In fact, they had never even intended to visit the Tanzanian island.
The empty nesters ended up on the ancient spice island by accident in 2021 after getting stuck when the travel “red list” was introduced by the UK Government during the pandemic.
The couple had been volunteering in Namibia and, faced with the prospect of a costly stay in a quarantine hotel on their return to Britain, they decided to extend their African holiday for three months.
“We went to Botswana, Zambia and Tanzania and eventually ended up heading to Zanzibar when it got too cold on the mainland,” says Mrs Vearncombe. “We came for a month, then thought we might as well stay a bit longer and decided this might be where we could have our holiday home.”
The couple are midway through building a four-bed clifftop villa with pool high above the coral-white sands of Kiwengwa on Zanzibar’s east coast. They had toyed with buying property while on holiday in other countries in the past, but as John Vearncombe says: “Whenever we looked at the sums, they didn’t make sense.”
Their sprawling “sugar- cube” villa is expected to cost £240,000, including the initial land purchase. The couple have funded their dream home by building nine apartments on the plot next to their house.
They’ve spent £549,000 to build the nine properties, which are expected to sell for a total of £911,000 (a 66pc return on investment).
“We’ve sold four apartments already,” said Mr Vearncombe. “A fifth is under offer.” They’d originally listed the two-bed apartments from €95,000 (£82,000). A two-bed penthouse with plunge pool and undisturbed Indian Ocean views was initially advertised for €190,000. Of the units still available, the cheapest costs €115,000.
Such prices are not wildly unrepresentative of what you can get for your money in Zanzibar. Twenty minutes down the road in the village of Uroa, another developer is selling two-bed villas with a communal pool for just under £59,000.
Away from the beach, meanwhile, a three-bed duplex with access to a pool and gym near Zanzibar’s ancient Unesco-listed capital, Stone Town, sells off-plan for £94,000.
Their Italian builder, who also runs a popular holiday letting agency in Kiwengwa on the north-east coast, calculated that each mid-priced, two-bed apartment could be let for the equivalent of £23,480 a year.
Once you take away the letting agent’s cut, as well as cleaning and laundry, service charges, utility bills and tax, which is a 15pc flat rate for non-residents, it works out to around £9,000 in post-tax income per apartment.
Such healthy returns made investing in Zanzibar a no-brainer for the Vearncombes: their pitch to would-be buyers may be focused on the potential cash flow from holiday lets, but the real money to be made in Zanzibar, according to former investment analyst Paul Tellwright, is potential capital growth.
Tellwright, 43, made around £35,000 in profit when he sold the $ 75,000 (£62,000) one-bed flat he bought offplan on a plot adjacent to the Vearncombes’ for $120,000.
Zanzibar is full of expats and tourists like him who discovered its low-crime, carefree lifestyle only during the pandemic. Tanzania was one of the few places on the planet not to go into lockdown or force visitors to wear a mask; its late president John Magufuli chose to keep the economy open. As a result, the economy grew throughout 2020 and 2021 while its neighbours entered their first recessions in more than a quarter of a century.
Resorts such as Paje have exploded beyond all recognition. In Paje, for instance, you’ll find a sprawling new development of 20 Balinese-style luxury villas rising from the bush beyond the main road. They’re the work of Richard Ashby, an estate agent from London who’d never set foot in Africa before he arrived in Zanzibar in 2020. His company, Shivo, has sold all the villas on the Paje site. It has gone on to break ground elsewhere, selling everything from one-bed apartments to three-bed houses with private pool for around £175,000.
“A friend of mine built an absolutely massive, really high-spec six-bedroom mansion with a swimming pool and acre of land for $200,000. If you want something very basic, you can build a house here for as little as $25,000.”
At a beachfront cafe in Paje I get chatting to Radek “Bond” Bednarz, who has
built a “simple bush house” on a £7,800 plot just outside Jambiani. The Polish musician did much of the building work himself.
It’s a similar story up the coast in Pongwe, where Pete Tingle is doing as much of his own building as possible. Tingle, 43, bought a half-acre plot in Pongwe for about £3,900 during his first visit to Zanzibar in August 2020.
“On the third week of that holiday, I was shown a piece of land,” says the Yorkshireman, who had been made redundant from his sales job a few days before the first lockdown in Britain. “I decided to buy it instantly, went back home and sold the house and the cars.”
There are no official stats on the booming prices but, according to long-term resident Maria Facci Tosatti, land prices have exploded since foreigners were allowed to register deeds in their own name in 2018.
Tosatti, an Italian who used to co- own a B& B, restaurant and kite-surfing school and now runs the restaurant at Kiwengwa’s KBB Resort, says she’s seen friends buy beach plots for 10 times what they were going for a decade ago, when she arrived.
Maciej Majerczak, who owns Zanzibar’s main estate agent, Mayer & Co, reckons prices have doubled in the past two or three years alone.
“I wasn’t here 10 years ago. Prices could have risen 10 times in 10 years,” Majerczak said. “People will sit on property here until they get the price they want.”
Far from reaching its peak, though, Majerczak is confident Zanzibar’s property boom is still in its infancy. “The island has changed dramatically in terms of infrastructure and investment in the three years I’ve been here,” he says.
“It’s a growing market with very high potential. You see big hotel chains building at the moment. Some are purchasing big plots.”
One of the big growth areas, according to Majerczak, is holiday lets. “Zanzibar has a shortage of Airbnb villas,” he says.
Figures from the tourist board back this up. Zanzibar experienced a 38pc increase in visitor numbers in the first six months of this year relative to the same period last year.
Searches for Zanzibar holiday lets have also risen sharply this year, according to Sonia Chennoufi from HomeToGo, a rental website.
Foreign property owners could soon be given temporary resident visas, so they would no longer have to keep leaving and re- entering the country every three months.
Of course, investing abroad – and buying properties off- plan – is not without risks. Jasmine Birtles, the TV financial commentator, says: “Buying off-plan is always a gamble, even in the UK. Here at home your biggest risk is that the builder goes bust. But you’ve also got land disputes, which can drag out the building work and result in you getting the keys long after you were supposed to have moved in.
“That’s why it’s comparatively cheap to buy a house off-plan, because you’re the one taking all the risk. You’ve got to try to do as much due diligence as possible. It’s unlikely you’ll be able to take out any form of deposit protection insurance, so you’ve got to weigh up the pros and cons.”
‘It’s a growing market with very high potential. You see big hotel chains purchasing big plots’