Sydney Pub Market Rebounds After Post-Covid Lows

Private investors are pouring into a frothy Sydney pub market as transaction values to October this year pass the 2024 total. A rush of deals in post-Covid years was followed by a 2024 slump for the sector, but investors are now queueing to get their orders in for top-shelf product. And unlike the bubbly markets of 2021 to 2023, the current frenzy reflects strength rather than operators searching for an exit, according to HTL managing director Andrew Joliffe. “We’ve got an abundance of demand for a great hospitality product, and not enough supply in terms of the product we can sell,” Joliffe tells The Urban Developer . “Lending institutions are very favourably looking upon the asset class. So the availability of well-priced debt is prevalent at the moment. “And multiple revenue-stream generation is also quite pronounced in that Sydney CBD and urban fringe market.” Those factors combined are forming “a triangulation of positivity that is leading to quite a fertile transaction landscape”, Joliffe says. Research by specialist valuers M3 Property backs that up. According to M3, NSW transaction volumes reached a peak in 2021, with 140 pubs traded, while values touched the top in 2022, with about $1.8 billion of deals made. Pub market punters paused to refuel in 2024, with just 40 sales worth $508.4 million . But by October this year, 20 deals have been made with a total value of $552.1 million—a decline in volume but a serious uptick in value. Sydney had nine of the 10 largest pub deals nationally in 2024, including Iris Capital’s acquisition of two Redcape venues, the El Cortez for $100 million and the Cabramatta Hotel for $90 million. ▲ HTL sold the Redfern Hotel for Martin Short off-market to a local hotelier family. HTL is dominant in the Sydney market, with around $300 million in sales so far in 2025, about 80 per cent of transaction values and volumes, including several of the short-lived Adgemis empire . Pub poker machines a wild card Retail spending is growing 4.57 per cent year-on-year, ahead of inflation at 2.1 per cent, according to M3. But gambling machine revenue grew by 8.8 per cent in the second quarter of 2025—four times the rate of inflation and almost double that of retail spending. In NSW, punters lost $2.27 billion to poker machines in the quarter, according to Wesley Mission analysis of Liquor and Gaming Authority data. Clubs took the lion’s share of that activity, with hotels responsible for just under $1 billion. A cap on machines and a system of government buybacks whenever licences are traded are designed to reduce the number of poker machines in the state over time. However, “record demand is driving reactivation of dormant entitlements, as venues seek to maximise gaming revenue ahead of further reforms,” according to M3. Licenses are trading in the range of $375,000 to $400,000 a machine, according to Joliffe, although in recent years have reached as low as $300,000 and as high as $650,000. If the conditions are right, buyers can recoup much of their investment by immediately selling off some of their machines, or bank them as a liquid component of the pub’s valuation. “Anytime you limit supply of something—the De Beers have been doing it for years with diamonds—then the value of those things is going to increase,” Joliffe said. Last call: diversifying away from beer M3 says that the sector faces “increased regulation, declining beer consumption, and economic uncertainty,” but an increase in tourism numbers as well as “a strategic shift toward premium experiences and diversified offerings” will underpin future growth. ▲ Beer consumption is declining, but pubs can pivot to alternative and premium offerings, according to M3 Property. While much has been made of changing trends around alcohol consumption and social practices, the community value of a pub is still core, Joliffe says. Alternatives for younger demographics, such as the Fortress esports-focused nightlife venue , remain fringe propositions. However, hotels can learn from boom industries such as craft breweries , and specialised operators like minigolf chain Holey Moley , in broadening out their segmentation. “Facilities for children at pubs—it’s not about hiding the kids at the side while the parents are on the dance floor … if you see some of the ones that have been put into hotels now, they’re like theme parks,” Joliffe says. According to Joliffe, maximising and optimising the trading hours remains the starting point for operators. That means quality food and coffee earlier in the day, and not just offerings for late-night punters. Diversifying revenue streams can also help. “Pubs are quite often on the high street, on a corner more often than not, and blessed by facilities that are often multi-level and offer a large footprint compared to other retail or client-facing businesses, so they’ve got that flexibility,” Joliffe says. Accommodation, functions, and even considering leasing exterior walls for signage are all options to pursue. “So you’re not only reliant upon alcohol; you’ve got to complement that with as many other channels as you can. That’s what the best business mix looks like.” Pubs with dead spaces on second or third levels can look at alternative development uses, if construction and materials costs add up . Alternatively, they can investigate simply “reinvesting some of that surplus profitability, by comparison to a former trading period, into bringing those rooms online,” Joliffe says. “It’s so powerful to be able to house ready-made captive audiences within the business, and in doing so, just give some vitality to those areas.”

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