Australia’s property and hospitality markets enter 2026 with a renewed sense of confidence, underpinned by strong regional tourism, improving monetary stability and a clearer outlook for capital flows. Regional visitor numbers remain at an all‑time high, continuing to support local economies and positioning the current period as an opportune moment for owners considering divestment. This sustained tourism strength has underwritten revenue across accommodation, hospitality and leisure assets, creating a favourable backdrop for transaction activity.

Monetary conditions, which had previously stabilised, have shifted materially following a sharper-than-expected rise in inflation. Australia’s headline CPI increased 3.8% in the year to December, up from 3.4% in November, with the acceleration driven largely by housing costs, food and non‑alcoholic beverages, and broader services inflation. Underlying inflation also firmed, with the trimmed mean CPI rising to 3.3%.

This upside surprise has altered the interest rate outlook. Markets now see a rate hike as the most likely outcome at next week’s RBA board meeting, which would be the first increase since November 2023. Economists note that both headline and core inflation are again firmly above the RBA’s 2–3% target, narrowing the central bank’s options. While 2026 had been expected to be a year of rate stability, the latest data introduce a more urgent tightening bias. Strong labour market indicators—including unemployment around 4.1%, a seven‑month low—further support the case for policy tightening as economic momentum remains resilient.

For investors, developers and accommodation-sector operators, this environment represents a shift from stability to heightened caution. Higher‑than‑expected inflation and the likelihood of imminent policy tightening will influence funding costs, debt pricing, project feasibility, and capital allocation in the near term. Nonetheless, a well‑signalled policy path and a still‑resilient economy provide a degree of predictability, with high‑quality assets; particularly those with strong fundamentals, clear operational upside and durable cashflows are expected to remain in demand despite tighter monetary settings.

Globally, the real estate capital cycle is gaining momentum. Savills World Research forecasts total investment turnover to exceed US$1 trillion in 2026, a 15% increase on 2025 levels. Renewed capital flows are already evident in Australia, with stronger transactional activity across major commercial sectors—particularly office and retail—in the final quarter of 2025. As capital deployment accelerates through 2026, this momentum is expected to extend further into hospitality and adjacent asset classes, where investors continue to prioritise stable, income‑producing opportunities supported by resilient tourism demand and robust operating conditions.

Pubs Market Overview

New South Wales

The New South Wales pub market accelerated sharply in the second half of 2025, effectively closing the activity gap that had emerged relative to Queensland over the prior 9–12 months. This momentum has carried into early 2026, with transactional and campaign activity commencing on a notably positive footing. Large regional freehold going concerns have been the primary focus in the opening weeks of the year, however metropolitan venues are expected to re-emerge and take centre stage as the year progresses. Following a period of yield softening throughout 2024 and much of 2025, yields have begun to tighten and are anticipated to continue strengthening across 2026.

Queensland

Queensland enters 2026 with expectations of robust activity throughout the year. Off-market transactions are anticipated to dominate the first six months as results are announced and scale assets transact; however, as confidence builds, vendors are expected to become more inclined to test the market. As vendor willingness to sell increases, a greater proportion of assets are likely to be brought to market via public campaigns to achieve appropriate exposure. The market performed consistently throughout 2025, with quality assets remaining tightly held. As momentum gathers and more opportunities are presented, larger groups may accelerate the divestment of non-performing assets within their portfolios, creating opportunities for private operators to acquire, reposition and trade up. Smaller regional pubs are expected to benefit from the uplift in activity, although this segment is likely to gain traction later in the year as competition intensifies for premium properties.

Victoria

Victoria’s pub market has recorded limited transactional activity over recent years, likely influenced by changes to stamp duty legislation and a highly consolidated ownership structure, particularly across gaming venues. With the market tightly held among a small number of key operators and stakeholders, transaction volumes have remained subdued. Vendors are now increasingly considering their options around divestment, with an acceptance that assets may transact at breakeven, or, in some cases, at a loss for properties acquired at the peak of the 2022–23 cycle. As a result, buyers are seeking entry points at softer yield levels compared to those achieved a few years ago.

Northern Territory and Western Australia

Both the Northern Territory and Western Australia continue to generate respectable levels of activity as suitable opportunities surface. The NT pub market remains tightly held and highly sought after, underpinned by the limited supply of pub assets, which continues to drive competition when opportunities emerge. In Western Australia, several larger hotel and pub assets remain controlled by mid‑sized corporate groups and a small number of national operators. As eastern‑state investors begin to broaden their geographic footprint, WA may experience transactional uplift in line with national trends.

South Australia

The South Australian pub market has stabilised following heightened investment activity around the implementation of note acceptors and ticket-in-ticket-out (TITO) in 2022. Looking ahead, the state is expected to see increased interest from groups seeking to establish or expand a multi-state presence. Yields remain broadly comparable to Queensland, positioning South Australia as an attractive diversification option for investors seeking to enhance blended portfolio returns.

Motel Sector

The motel sector is showing a meaningful rise in transactional activity as private equity, offshore groups and sophisticated domestic investors turn their attention to this historically under‑institutionalised asset class. While ownership remains largely fragmented across “mum and dad” operators and private freehold investors, corporate investment has yet to meaningfully take hold. That said, early indicators suggest the sector is entering the initial stages of a corporatisation cycle. Investors are drawn to the sector’s favourable return profile relative to other forms of accommodation, as well as the consistency of revenue supported by stable domestic travel over the past three to five years.

Investor confidence continues to build, with increased capital deployment anticipated in the coming months. The motel sector is widely viewed as one of the tourism and hospitality segments most likely to experience a material shift in its investment landscape, with greater corporate and institutional participation expected to drive heightened transactional activity over the medium to long term.

Caravan Parks

Following a period of strong transactional activity in the post-COVID environment, the caravan and holiday park sector continues to demonstrate solid investor appetite from institutional investors, corporate groups, private equity firms and high net worth individuals. As new investor groups continue to emerge, often backed by private wealth and private equity capital, sales activity within the sector is expected to outperform comparative periods in previous years.

Demand remains focused on large-scale caravan parks located in established tourism destinations, particularly assets offering surplus land that provides scope for expansion, redevelopment or operational enhancement.

Disclaimers:

The postings by any individual on any blog do not necessarily represent the position of Savills, its strategies or opinions.