The residential property market in Madagascar is currently standing at a pivotal crossroads. As we move through 2025, the sector has transitioned into a high-growth phase driven by a 4.2% projected GDP increase and a rapidly urbanizing population that is now estimated at 33.5 million.
While structural challenges, such as an informal land registry and limited traditional financing, persist, they have created a unique “first-mover” advantage for investors who can navigate the local landscape.
This report looks at two sides of the Madagascar market: a major lack of homes in big cities like Antananarivo, and a fast-growing interest in vacation and luxury homes in beautiful beach areas like Nosy Be and Sainte-Marie.
For those looking beyond traditional markets, Madagascar offers some of the highest gross rental yields in the Indian Ocean region, provided they have the right local expertise to secure their assets.
Tl; dr: The analysis of the 2025 residential property market presents significant structural challenges, but also a wealth of opportunities for 2026 where the potential for high-impact investment is clear. If you are ready to invest in real estate, Madagascar Invest can help you find the property that suits your needs.
Housing Market Snapshot in Madagascar
The residential property market in Madagascar is growing steadily, much of this interest comes from people looking for luxury homes near the beach. Both local buyers and people from abroad are showing more interest in these high-end coastal properties than ever before.
However, understanding the market is not always simple because so much of it is informal. Most property deals happen away from official records, which makes it hard to compare Madagascar to nearby places like Mauritius, where data is easier to find. Because the government still uses paper files to track land ownership instead of a digital systemgetting a clear picture of the market requires extra effort.
At the same time, the country is facing a massive housing shortage. In recent years, the housing supply gap (backlog) has reached 1,730,000 units , with an annual housing demand of approximately 130,000 units per year.
This is a significant jump from the 800,000-unit shortage reported just a few years ago. The problem is most serious in the big cities, where more people are moving in every day, but not enough new homes are being built to keep up.
The Housing Demand
The demand for property in Madagascar is split into two main groups. On one hand, there is a constant need for basic housing in the cities. On the other hand, there is a growing interest in “lifestyle” properties, such as vacation homes and resorts. These two markets drive the real estate sector in very different ways.
The biggest drivers of the market are the major cities like Antananarivo, Toamasina, and Mahajanga. These urban centers are growing fast because the population has increased by 2.5% – 2.6% in recent years.
Since these cities are home to government offices, international NGOs, foreign embassies, and large company headquarters, there is always a strong need for rental homes and offices for professionals and workers.
Since these cities are home to government offices, international NGOs, foreign embassies, and large company headquarters, there is always a strong need for rental homes and offices. In the capital, the price of a house in the city centre averages 192,000,000 Ar, while properties outside the centre average 144,000,000 Ar.
At the same time, coastal areas like Nosy Be and Sainte-Marie are becoming very popular with a different kind of buyer. These “lifestyle investors” are not looking for crowded city apartments. Instead, they want beachfront villas and plots of land where they can build private homes or small eco-friendly resorts. This part of the market is focused on tourism and luxury rather than everyday housing.
This demand is reflected in the rising cost of space; the price of an apartment per square meter in the city centre is now 3,050,389.71 Ar, compared to 2,655,557.27 Ar outside the centre
Looking ahead through 2026, the demand for property is expected to stay strong. Even with economic challenges around the world, more people are moving to Malagasy cities every day. With the country’s economy expected to grow by 4.2% to 4.3%, the real estate market should remain stable and active.
However, inflation remains a factor; the Consumer Price Index (CPI) for housing services stood at 173.1 points in November 2025, a notable rise but still below the historical high of 487.4 points recorded in December 2015.
Madagascar Residential Supply Market
The quality of housing in Madagascar shows a sharp divide between urban and rural life. In the cities, about 73.1% of buildings are considered to be in good condition. However, in the countryside, the situation is much tougher, with over 60% of homes classified as poor quality. This gap has created a very busy market for land brokers who help people find space to build or rent, often working across both official channels and informal networks.
The cost of entry for new builds is also rising; the cheapest newly built house cost 962,434 Ar in 2022, up from 633,927 Ar in 2019. For those buying by the meter, the cheapest price per square meter for a new build in 2022 was 600,000 Ar.
To help close this gap, the government was working on a major plan to build six new urban areas. This project includes 38,220 sustainable homes for families with lower incomes, 2,235 apartments for the middle class, and 300 luxury homes.
The long-term goal is to provide housing for more than 200,000 people, with nearly 94% of the project dedicated to affordable social housing.
Improving basic services like water and electricity is also a key part of the plan. The goal is to make sure at least half of the country has affordable electricity by 2030. Progress has been slow; national electricity access only grew slightly from 15.6% in 2016 to about 17% in recent years.
For most people, a land certificate is the best way to prove they own their property because it is much cheaper than a full land title. Since 2005, local offices have issued 520,000 of these certificates, and another 300,000 were being processed from 2020.The World Bank also points out that since 2015, about one-quarter of these new certificates have been given to women, which is an important shift for the country.
This is a huge achievement considering that only 600,000 full land titles were issued in the last 100 years. The property registration timeline is approximately 100 days and the registration costs remain high at about 9% of the property value.
Even with these improvements, building new structures remains difficult. In 2020, Madagascar was ranked 182nd out of 190 countries for the ease of getting construction permits. A developer typically has to go through 17 different official steps, a process that takes an average of 194 days.
The costs are also high, often adding up to about 35% of the total value of the building. This makes it challenging for many people to move from informal housing into safe, legally recognized homes.
Rental Market
The rental market is the most important part of housing in Madagascar. According to UN-Habitat, there is a serious lack of land with proper services, like water and electricity, in the capital city. This shortage has made building values much higher than they would normally be.
Rentals are the dominant choice for most people. Over 3 million households across the country currently rent their homes. In urban areas, between 60% and 70% of all buildings are occupied by tenants rather than owners.
Monthly rents vary significantly by location and size:
| Property Type | City Centre (Monthly Rent) | Outside Centre (Monthly Rent) |
| 1 BR Apartment | 1,442,500.00 Ar | 675,091.57 Ar |
| 3 BR Apartment | 3,946,666.67 Ar | 2,063,333.33 Ar |
Because land ownership rules are often informal, landlords have a lot of power. They usually set prices based on the specific location and how close a building is to business centers, rather than the actual quality of the construction.
Even though there is no official price list from the government, the market trends for 2025 and 2026 show that the potential to earn money from rent is very high.
Mortgage Market
Getting a traditional mortgage is rare. The central bank’s interest rate is high (around 12%) and the annual mortgage interest rate (20-year fixed) averages 15.56%. Borrowing is therefore very expensive.
Mortgage lending remains a tiny fraction of the economy, with a ratio of mortgage to GDP of only 0.92% (2021). In the second quarter of 2024, the average mortgage debt per capita was just $1.70 USD.
While this was a 15.7% increase from the previous months, it is still much lower than the all-time high of $3.03 USD recorded back in 2008. For comparison, the lowest point was in 2013, when it dropped to just $0.59 USD per person. For most people, the mortgage as a percentage of income can reach up to 514.95%.
Because bank loans are hard to get and expensive, with interest rates often between 17% and 18% for up to a 20-year term, many people use a “Rent-to-Own” system (Vente-Location). In this setup, a developer lets a tenant pay a fixed rent for 10 to 15 years. Once that time is up, the tenant officially becomes the owner of the home.
For foreign investors, the rules are different. Foreigners cannot own land forever (freehold). Instead, they use a long-term lease called an emphyteutic lease, which can last up to 99 years. This lease is considered the “gold standard” because it gives the investor a legal right that can be sold or even used as collateral for a loan.
Market Affordability & Investment Returns
The current data reveals significant hurdles for the average buyer, alongside high potential for investors. The Price to Income Ratio stands at 31.59, and a typical mortgage requires 514.95% of the average income, resulting in a very low Loan Affordability Index of 0.19.
However, for those with capital, the rental market offers strong returns.
- Gross Rental Yield (City Centre): 12.73%
- Gross Rental Yield (Outside Centre): 7.29%
- Price to Rent Ratio: 7.85 in the city centre versus 13.72 outside.
Socio-Economic Context
The construction and real estate industry has become a major engine for Madagascar’s economy. Research from the French Embassy’s economic service shows that this sector now accounts for more than 10% of the country’s GDP, which is valued at roughly $473 million USD.
Beyond just the money it generates, the sector is a massive source of employment. Recent census data reveals that about 165,600 people, or 1.7% of the working population, earn their living through construction and property-related work.
There are two main reasons why this sector is growing so quickly. First, the rapid increase in the urban population is creating a massive need for new apartments, houses, and office buildings, which are mostly funded by private developers.
Second, the government is focusing on large infrastructure projects like roads and bridges, often using funds from international donors to help modernize the country’s foundation.
The future for investment looks very promising as the country works to solve its housing crisis. Since there is currently a shortage of hundreds of thousands of homes, experts believe that real estate professionals and private investors could pour more than $300 million USD into the market before 2030.
The legal environment is also becoming more welcoming to outside investment. Current laws allow foreign companies to acquire land and buildings under specific rules. While Malagasy citizens can own land fully, foreign investors can secure property through long-term leases that last between 18 and 99 years.
These leases are very flexible because they can be renewed, sold, or changed as the project evolves, providing a reliable way for international businesses to participate in the country’s growth.
Key Notes
- Critical Shortage: The housing supply gap has widened to 1.73 million units, creating an urgent need for mid-scale residential development.
- Urbanization Pressure: Annual demand is growing by 130,000 units per year, driven by a population growth rate of over 2.5% in major cities.
- Lifestyle Pivot: There is an unprecedented surge in demand for beachfront villas and eco-resorts in Nosy Be and Sainte-Marie, primarily from foreign “lifestyle investors.”
- Infrastructure Catalyst: New government road and energy projects are expected to act as a “multiplier,” increasing the value of land near new transit corridors.
- Rental Dominance: With 60-70% of urban residents renting, the demand for secure, serviced apartments remains the most resilient segment for consistent cash flow.
Conclusion
The Madagascar real estate market offers a rare combination of high rental yields and a massive, underserved demand for housing. While the complexities of land titles and permit processes can be daunting, the rewards for those who enter the market early are substantial.
Navigating this landscape requires more than just capital, it requires local knowledge, legal precision, and a presence on the ground. At Madagascar Invest, we specialize in bridging the gap between international investors and high-potential Malagasy real estate by providing a vast choice of properties that is sure to meet your requirements. We handle the hard work, from title verification to securing 99-year leases, so you can invest with confidence.
Are you ready to capitalize on the 2026 growth cycle? Contact Madagascar Invest today to find the property that perfectly suits your needs and investment goals.
