Lubricating Real Estate Markets in Tanzani

This study was motivated by a casual observation of individuals in the City of Dar es Salaam seeking advices and/or project write-ups to enable them negotiate for credit financing of land they owned. Most of them were banking on possibility of a foreign source of funding reflecting on the foreign-direct-investments (FDIs) euphoria in the local economy. It was intriguing to find out why now and who were these financiers that the landowners were targeting. An attempt to find out whether there were similar cases in history or elsewhere around the Eastern Africa region, did not seem to explain the big rush that was being observed in Dar es Salaam for these foreign finances. It was probable that the re-introduction of mortgage finance in Tanzania by Act No. 17 of 2008 and the Bank of Tanzania efforts to set up a Secondary Mortgage facility- the Tanzania Mortgage Refinancing Company (TMRC) in 2010 was sending speculative wave amongst the population. Direct interviews with 8 finance seekers and 3 key informants at the Bank of Tanzania and Ministry of Lands confirmed huge opportunities in real estate investment in Dar es Salaam. It was observed that most of the hurdles that had bogged down private real estate investment had been removed and therefore providing incentives to developers. However, it was clear that real estate opportunities in the City would not be simply unlocked by developing a housing mortgage finance market. Past experience indicates externally-influenced development strategies such as the privatization schemes of 1990s to revamp the economy had failed. Unless a coordinated strategy is adopted both at local and central government levels that closely links the land management, housing and legal sectors, it is very probable that Tanzania will experience a short-lived real estate boom like what neighboring Kenya went through in the last 3 years.