German developer presents Tanzania as alternative to investing in Gulf housing
Amid a slowdown in the residential sector in the region, a German developer will this month promote its housing project in Tanzania to Arabian Gulf investors.
The developer, CPS Live, will be making its pitch at the Arabian Travel Market, which runs from April 25 to 28 in Dubai. The project is in a free economic zone, which enables foreigners to get a title in the form of a 99-year lease under their name.
“Economic slowdown in the Arabian Gulf region currently motivates investors to search for new markets,” said Sebastian Dietzold, the managing director of the Fumba Town Development and the founder of CPS Live. “The [Arabian Gulf] is currently the strongest growing touristic market [for Zanzibar], which has historically strong links to especially Oman and the UAE.”
The first 400 units of the 1,500-unit, US$120 million project on the coast are to be handed over starting at the end of next year. The entire project is to take about five years to be complete.
CPS Live is to continue to manage Fumba Town for at least 10 years after completion, including letting and management services for house owners living abroad.
A German prefabrication factory is under construction near the site to supply the villas, and is expected to be ready in September. It would have an annual capacity of 250 homes a year.
The project started rolling in 2011, when CPS Live and the Zanzibar Investment Authority started talks for a residential project on the island.
The demand for affordable housing is on the rise in the country. The capital city, Dar es Salaam, remains the major residential market in Tanzania, and foreigners cannot own apartments. The public sector is building a large number of low and middle-income housing across the country, and in Dar es Salaam alone, pension funds were expected bring to the market at least 8,000 residential units last year, according to a report from the consultancy Knight Frank last year. The Tanzania Buildings Agency also plans to build 2,500 units across the country, it said.
Tanzania’s government is implementing austerity measures, which includes state spending cuts, according to the research company IHS.
The GDP per capita by purchasing power parity in 2014 for Tanzania is US$2,000 to $2,999, according to the IMF.
According to Mr Dietzold, the first phase of the Fumba Town Development is about 80 per cent sold, mostly from Tanzanians at home and abroad. Located on Unguja, also known as Zanzibar Island in the archipelago, the development aims to be a satellite township for Zanzibar town.
The developers expect a 15 to 20 per cent return on rentals and a capital appreciation. Prices start at $45,900 for a two-bedroom villa.
Mr Dietzold started CPS Live in 2004 in Germany and moved to Zanzibar in 2011.
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Updated: April 3, 2016 04:00 AM