CBRE flags ‘There Is No Alternative’ for property investment as supply tightens into 2026

CBRE has released its 2026 Pacific Market Outlook, warning that ongoing supply constraints across property sectors will leave investors, occupiers and renters with increasingly limited choices in the year ahead.

The theme of the report, ‘There Is No Alternative’ (TINA), reflects a market environment where new development opportunities are scarce and demand is being pushed back towards existing assets. While the acronym is commonly associated with equities, CBRE says it has growing relevance for real estate as supply continues to undershoot demand across Australia and New Zealand.

Listen to the latest CBRE Talking Property Podcast episode HERE

According to CBRE, new development supply is forecast to fall 20 percent to 50 percent below historical levels for the rest of the decade, driven by elevated construction costs, delivery risk and financing constraints. As a result, competition for existing assets is expected to intensify, accelerating demand to lease and buy well-located properties.

CBRE Head of Pacific Research Sameer Chopra said reduced choice will shape investor behaviour in 2026.

“New supply is set to undershoot historical levels by 20 percent to 50 percent for the rest of the decade. With reduced property choice, the alternatives for investors and renters are increasingly limited,” Mr Chopra said.

“We see demand to lease and buy accelerating into the next best, and only, option. In tandem, income yield contribution will start to dominate total returns, except in the residential sector.”

Hotels positioned to benefit from supply shortfall

Within the hospitality sector, CBRE expects the supply-demand imbalance to support hotel performance, particularly in established markets where replacement costs remain high. The report notes that investors are increasingly favouring existing hotel assets, with new builds often proving unviable given current construction and financing conditions.

CBRE forecasts hotel investment volumes to grow by around 10 percent in 2026, supported by improving transaction activity and strong underlying tourism demand. Over the medium term, tightening cap rates are expected to underpin asset values, particularly for well-located and higher-quality properties.

The report also highlights the role of population growth in driving future hotel demand. CBRE estimates that every one million increase in population requires approximately 11,500 additional hotel rooms, underscoring the structural pressure facing the sector as development pipelines slow.

Income returns take centre stage

Across asset classes, CBRE expects income yield to play a greater role in total returns as capital growth moderates. For hotels, this shift reinforces the appeal of stable cash-flow assets in key tourism and business travel markets.

Looking ahead, CBRE Research expects transaction volumes across commercial property to rise 5 percent to 10 percent in 2026, with cap rates tightening by 25 to 40 basis points over the 2026–2028 period, depending on asset class. Premium assets and properties close to major infrastructure are expected to prove more resilient as investors prioritise quality and long-term income security.

Hotels: Key points

• New hotel supply remains limited, with high construction costs and delivery risk constraining development.

• Investor focus is shifting to existing assets, as replacement costs make new builds less viable.

• Hotel investment volumes are forecast to rise in 2026, supported by improving transaction activity.

• Income yield is set to play a bigger role in returns, favouring stable, well-located hotel assets.

• Population growth continues to underpin demand, adding long-term pressure to hotel supply.

CBRE’s 2026 Pacific Market Outlook covers Australia and New Zealand and examines macroeconomic conditions, investment trends and sector-specific forecasts, including a dedicated analysis of the hotels market.

More news from CBRE in AccomNews HERE