The upgrade included a swimming pool, cattle enclosure and amphitheatre, the public protector said on Wednesday.
In a damning report released six weeks before an election, South Africa's top anti-corruption watchdog accused Zuma of conduct "inconsistent with his office" and said he should repay a reasonable part of the cost of the unnecessary renovations.
"The President tacitly accepted the implementation of all measures at his residence and has unduly benefitted from the enormous capital investment in the non-security installations at his private residence," Public Protector Thuli Madonsela said in her report.
The 444-page summary of the two-year investigation into the renovations at Zuma's sprawling homestead at Nkandla in rural KwaZulu-Natal province painted a picture of systemic government incompetence and flouting of normal tender procedures.
(READ MORE: "Security" swimming pool lands South Africa's Zuma in hot water)
It was likely to damage the image of scandal-plagued Zuma and his ruling African National Congress (ANC) in the forthcoming elections. The ANC, which has staunchly supported the president over several previous allegations of corruption, was due to hold a news conference later in the day.
Madonsela described the cost overruns as "exponential" and said ministers had handled the project in an "appalling manner".
When news of the security upgrade first broke in late 2009 in the media, the cost was estimated at 65 million rand ($6.1 million). However, despite intense public scrutiny, the bill ballooned to 246 million rand ($23 million) as the project and its costs spiralled out of control.
The total spending amounted to eight times the estimated present-day value of securing the home of Nelson Mandela, South Africa's first black president, who died in December aged 95.
It is also more than 1,000 times that spent on F.W. de Klerk, the white president who stepped down in 1994 after the first all-race elections that signalled the end of apartheid.
Madonsela's report, entitled "Secure in Comfort", said public works funds had to be diverted from inner-city regeneration projects to carry out the upgrade on Zuma's home.
It added that at no point did Zuma express misgivings at its scale or opulence even though the construction would have raised the eyebrows of a "reasonable person".
"A substantial amount of public money would have been saved had the president raised his concerns in time," the report said.