An exotic island seduces British investors with a66% rental yield in real estate.

John and Bronwen Werncombe never planned to become real estate developers in Zanzibar. In fact, they never even intended to visit this Tanzanian island. The couple ended up on the ancient spice island by accident in 2021, when the British government introduced a pandemic "red list" of travel.

After working as volunteers in Namibia and facing the prospect of an expensive stay in a quarantined hotel when returning to Britain and canceling flights home, they decided to extend their African vacation by three months. They first stayed in Namibia, then traveled across the continent to go on safari in reserves devoid of tourists. "We visited Botswana, Zambia and Tanzania, and eventually ended up in Zanzibar when it got too cold on the continent," Mrs. Werncombe says. "We came for a month, then decided to stay a little longer and decided this might be the place for our country home."

A couple who have never owned foreignreal estate before are halfway through building a four-bedroom villa on the cliffs with a pool high above the coral-white beaches of Kiwengwa on the east coast of Zanzibar. They had toyed with the idea of buying property while vacationing in other countries in the past, but as John Werncombe explains, "when we looked at the numbers, they didn't make sense."

Their luxury 'sugar cube' villa is expected to cost £240,000, including the initial purchase of the land. The couple are financing their dream home by building nine apartments on the land next to their house. They have spent £549,000 building the nine apartments, which are expected to sell for a total of £911,000 (66% profit). "We have already sold four apartments," says Mr. Werncombe. "The fifth is under offer."

They were originally selling two-bedroom apartments from €95,000, or around £82,000. A two-bedroom penthouse with a plunge pool and inviolate views of the Indian Ocean was originally advertised for €190,000. Of the available apartments, the cheapest is priced at €115,000. That's around £100,000 for a one-bedroom apartment with a communal pool, a two-minute walk from one of Zanzibar's best beaches.

Twenty minutes away, in the village of Uroa, another developer is selling two-bedroom villas with shared pool for just under £59,000. Away from the beach, however, a three-bedroom duplex with access to a pool and gym near Zanzibar's capital, the old town, is selling on pre-let for £94,000.

While these properties are larger, they won't bring you the same profit margins as Werncombe's Ocean View Apartments, which are in a luxury village. Their Italian developer, who also owns a popular letting agency in Kiwengwa on the north east coast, has calculated that each average one-bedroom apartment could be rented out for the equivalent of £23,480 a year. After taking into account the letting agent's commission, plus cleaning and laundry costs, utilities, energy bills and tax, which is a 15% apartment rate for non-residents, this equates to around £9,000 net profit per apartment after tax.

Of course, traveling to view potential sites or to vet their tenants comes with some inconvenience and expense for UK investors. There are no direct flights from the UK to Zanzibar, which means travel times of at least 13 hours each way, and stops are usually in Dubai, Kenya or Turkey. When considering a single return trip in November, the cheapest deals start at £460, but ticket prices usually exceed £800.

Nevertheless, such high returns led the Werncombs to invest in Zanzibar, where they set up a rental business in their hometown of Winchester. The couple admits they "probably overpaid" for land and builders. "But we looked at the margins and thought, yes, we can make money from this," they say.

Werncombe's offer to potential buyers may focus on possible cash flow from vacation rentals, but the real money to be made in Zanzibar, according to former investment analyst Paul Tellwright, is tied to its capital appreciation potential.

Tellwright, 43, made about £35,000 when he sold a one-bedroom apartment he bought for $75,000 on a plot of land next to Werncombe's $120,000 home a few months later.

Tellwright, like Werncombe, had never visited Tanzania before "escaping" to Zanzibar in late 2021. The Scotsman, whose mother was born in Northern Rhodesia (now Zambia) and whose childhood he spent in neighboring Malawi, traveled with his girlfriend and mother to escape the harsh restrictions due to Covid in Dublin, where they then lived. Zanzibar is full of foreigners and tourists like him who only discovered its low-crime and carefree lifestyle during the pandemic. Tanzania was one of the few places on the planet that didn't impose quarantines or mandatory masks for visitors; its late president, John Magufuli, who had a PhD in chemistry, decided to follow established pandemic protocols and keep the economy open. As a result, the economy grew throughout 2020 and 2021 while its neighbors entered recession for the first time in a quarter century.

Resorts like Paje, in the south-east, have exploded in the last three years, with new facilities, bars and restaurants springing up, stretching from the beach to the main road and beyond. Some, like the five-star Nest hotel, fancy walkways and palm villas, were built by Western tourists who found themselves trapped in Africa when Europe lifted its bridges in March 2020. Others were built by foreigners who moved to Tanzania to escape restrictions elsewhere. In Paje, for example, you'll find a huge new construction of 20 Balinese-style luxury villas rising out of the thicket behind the main road. This is the work of Richard Ashby, a London-based estate agent who had never set foot on African soil until he arrived in Zanzibar in mid-2020. His company, Shivo, sold all the villas on the Paje site. It went on to build somewhere else, selling everything from one-bedroom apartments to three-bedroom houses with private pools for around £175,000.

However, while you can struggle to buy even a small house for that kind of money in Britain, Tellwright says you can build your own property even cheaper. “A friend of mine built an absolutely huge, very high quality house with six bedrooms, a swimming pool and an acre of land for $200,000. If you want something very simple, you can build a house here for as little as $25,000.”

Indeed, here you will meet many people who have chosen this path. At a beachside café in Paje, I met Radek “Bond” Bednarz, who has built a “simple bush house” on a £7,800 plot near Jambiani. The Polish musician, who lives in a modest coconut hut for six months while he tours the island with his Afro-fusion band Pamoja Zanzibar, did most of the building work himself. In Pongwe, the story is the same, with Pete Tingle also doing everything he can on his own to keep costs down. Tingle, 43, bought a plot in Pongwe of about an acre and a half for £3,900 during his first visit to Zanzibar in August 2020. “In the third week of that vacation I was shown a plot of land,” said the Yorkshire resident, who was sacked from his job as a salesman a few days before Britain's first lockdown. - “I decided to buy it straight away, came home and sold my house and cars.” He built several one-bedroom villas in an “A”-style and