The $1.7b pubs boom that shows no sign of slowing
The pub trade is on a hot streak, with investment so far this year already well ahead of the annual average as powerful family-run groups and fund managers take heart in the sector’s growth despite younger people drinking less.
That confidence is driving up the deals as investors scramble to snap up the best venues. One of the biggest pub transactions this year – and of any year – was Scott Didier’s purchase of The Beach Hotel in Byron Bay for $140 million from Redcape Hospitality. It’s the second-highest price paid for a pub on record.
Transaction volume across Australian pubs, bars and nightclubs has hit about $1.717 billion from 95 transactions as of September – surpassing the total in 2024 of $918.07 million from 98 transactions, according to M3 Property research.
The industry’s 10-year historical average is $1.48 billion across 160 transactions.
There has been a lack of opportunities in the market for publicans to expand due to a supply squeeze, which is pushing up prices, according to commercial real estate agents.
The mega deal in Byron Bay is just one of a run of high-profile trades. The Feros family’s JDA Hotels purchased The Crystal Palace Hotel in Sydney’s CBD for about $35 million at the end of April, while hotelier John Daly and long-standing pub family the Gallaghers offloaded the Terrigal Hotel on NSW’s central coast for $47 million to Hunter Hotel Group in August.
Gallagher Hotels’ Angela Gallagher said pubs are being snapped up quickly, especially if they are in coastal locations, with many selling off-market as happened with their divestment of the Terrigal Hotel in NSW.
“We didn’t go to market because we just thought we’d test it,” Gallagher told The Australian Financial Review. “We’d been there for 12 years and we were ready to sell and it seemed to be quite a success for us.”
Gallagher Hotels would love to expand, but it was waiting to find the right venue to come up, she said.
The deals bonanza this year comes even as the $20 billion industry – which takes in bars and nightclubs – navigates changing consumer preferences, economic headwinds and regulatory changes, M3 Property’s James Ruben says.
“Over the next five years, industry revenue is expected to grow despite being faced with key challenges, including increased regulation, declining beer consumption, and economic uncertainty,” he said.
“Younger generations, they don’t seem to statistically gamble as much, they don’t seem to drink as much, so there’s a much bigger focus on quality food and entertainment.
“However, the sector is positioned to benefit from the recovery in tourism, lower interest rates, and a strategic shift toward premium experiences and diversified offerings.”
Industry revenue is expected to grow by 1.9 per cent annually over the next five years, according to the real estate agency’s research.
Andrew Jolliffe, national director at HTL Property, said pub transaction volumes were up about 30 per cent nationally in the nine months to September, compared to the same period last year, because of the lack of stock and high demand in the market.
“Metro markets have performed proudly so far this calendar year, with Sydney CBD and city fringe dominating sales nationally and now in excess of $500 million,” Jolliffe said.
“The pub market is more closely regulated to that of almost all other property markets, the barriers to entry for new stock is commensurately limited, and as a result of which there is less new product.”
Institutional investors had also been active in the market.
ASX-listed alternative asset manager MA Financial Group’s Redcape Hotel Fund, which gives investors access to $1 billion worth of hotels along the east coast, announced a capital raising in August at the same time as purchasing the leasehold of the Orion Hotel in Springfield, Queensland for about $30 million.
The fund finished the 2025 financial year with about 14 per cent growth – excluding new pubs – and was up 20 per cent in the first quarter of the 2026 financial year.
Chris Unger, managing director of Redcape Hospitality, said pubs were trading really well within its fund – which they were continuing to grow.
“The dynamic that pubs have where there’s limited supply and there’s existing participants doing well … and their inherent desire to continue to grow, it just consolidates the sector more and more,” Unger told the Financial Review.
“You’ve got a lot of healthy operators vying for a limited number of assets; that just continues to increase values.”
Another major show of faith in the pub sector at the end of 2024 was Charter Hall Retail REIT and Hostplus’ takeover of Hotel Property Investments for $760 million. It followed their takeover of ALE Group for $1.7 billion nearly four years ago.
Ben McDonald, head of pubs at property agency JLL, said the pub market was super strong right now.
“There’s significant pent-up demand at the moment, and what we’re seeing is capital looking for a home,” he said. “It’s finding the assets at the moment, which is becoming a little bit harder right now.
“We’re all working hard to create the opportunities for people that are looking to invest further.”
Larger, family-run groups were dominating demand for freehold going concern opportunities in the pub space, which comprised the majority of transactions each year, McDonald said.
